Fund Stock Selection "Group" Behavior And Fund Performance

In recent years,as the main force of institutional investors in China’s capital market,the development of public funds has been very rapid.The continuous hot market for fund issuance has led to a continuous increase in the scale of public funds,and popular funds frequently become the center of attention,with investors scrambling to invest.The market problem reflected behind this phenomenon is the phenomenon of grouping of funds that is,public funds of the same series or similar styles will concentrate their holdings on a few stocks or industries.By grouping and then by issuing new funds and continuously buying heavily weighted stocks,the stock price can be continuously pushed up,thus forming a positive cycle.Increasingly,research shows that institutional investors may exhibit various irrational and short-sighted behaviors in financial markets,and pushing up heavily weighted stocks,the net asset value of the fund can perform well,exacerbating the market volatility.Therefore,in China’s financial market,institutional investors often exhibit "grouping behavior".Therefore,in-depth research on the grouping behavior of China’s public funds is not only of important theoretical significance,but also has enlightening significance for practical purposes.This article focuses on the stock funds and equity-biased mixed funds within China’s domestic market from 2017 to 2021.Using quarters as the period,a nonbalanced panel data set of 20 periods and 8125 records was formed to study from the perspective of individual funds.The study primarily employs the fixed-effects multivariate regression empirical analysis method,combining the top holdings of stocks and top ten holdings of funds held by the funds to define the degree of fund grouping.The study explores the impact of fund grouping behavior on fund performance,as well as the degree of influence of fund grouping on fund performance under different market environments,fund age,and fund types,and further investigates the impact of fund performance rankings on cross-period fund grouping behavior under a relative ranking mechanism.Through the research,it was found that:(1)There is a positive correlation between the degree of fund grouping and fund performance,and the higher the degree of fund grouping,the higher growth rate of its performance,but the sustainability of this impact is relatively short;(2)When the market return is higher,that is,when the market is doing well,the higher the degree of fund grouping,the more significant the impact on improving fund performance;the longer the fund tenure,the smaller the impact of fund grouping on fund performance;(3)The impact of the degree of fund grouping on fund performance for stock funds is stronger than that of equity-biased mixed funds;(4)Funds with relatively lower performance rankings tend to enhance their degree of fund grouping in the next period.