Fund Manager Active Management Capability And Fund Performance

With the deepening of reform,China’s fund industry has also seen rapid development.As of June 2022,the total number of public funds in China has expanded from 53 in 2001 to 9,725,and the fund size has grown from 0.08 trillion yuan to 25.52 trillion yuan,achieving an increase of nearly 319 times and ranking fourth in the world,becoming a more popular asset allocation tool for investors.For one thing,with the increasing diversification of investors’ risk appetite and investment needs,different types of funds have emerged,among which,active funds,typically represented by equity funds,are more dependent on fund managers,and investors in the market hold a high degree of enthusiasm for them,expecting to obtain returns that exceed the market benchmark by virtue of fund managers’ professional management ability.For another thing,the rapid increase in the number of funds has also driven the demand for fund managers,but due to the limited speed of training fund managers,it has become a norm for a single fund manager to manage multiple fund products at the same time.This phenomenon has also attracted the attention of the regulatory authorities.Therefore,a correct understanding of the relationship among fund managers’ active management ability,fund performance and limited attention can more comprehensively evaluate fund performance and fund managers’ management ability,so as to improve the efficiency of resource allocation in the fund market,direct capital flow to fund managers with asset management ability.This paper uses the quarterly data of China’s open-end funds from 2017 to 2021 to construct a panel fixed-effect model,and empirically analyzes the relationship between the active management ability of fund managers and the performance of active funds in China from the perspective of limited attention.This paper considers the advantages and disadvantages of different performance evaluation indicators and selects eight indicators.The comprehensive evaluation index of fund performance is constructed by principal component analysis as the explanatory variable of this paper.The core explanatory variables of stock selection ability,industry allocation ability and risk control ability were selected to represent the active management ability of fund managers,so as to comprehensively measure the macro and micro investment ability and risk control ability of fund managers.The moderating variable is the limited attention of the fund manager.In the empirical part: firstly,the impact of fund managers’ active management ability on fund performance and sustainability were analyzed.Secondly,the moderating effect of limited attention of fund managers on fund managers’ active management ability and fund performance was studied.Then,further analysis of the cyclical impact of fund managers’ active management level and limited attention was made.Finally,a robust analysis is carried out.The empirical results show that:(1)The active management ability of fund managers has an impact on fund performance.Among them,the fund manager’s stock selection ability and timing ability are substitutionary,and the multiplication items of the two are positively correlated with the fund performance,and the fund manager’s industry allocation ability(industry concentration measurement)and risk control ability(maximum drawdown measurement)and fund performance show a nonlinear relationship of inverted U-shaped and U-shaped,respectively.(2)the limited attention of the fund manager can positively affect the performance of the fund,and the limited attention of the fund manager will inhibit the impact of active management ability on the performance of the fund;(3)The impact of fund managers’ active management level on fund performance and the moderating effect of limited attention are cyclical.Among them,the impact of fund managers’ active management level on fund performance is continuous and more significant in bear markets;Limited attention in a bear market can enhance the positive effect of active management level on fund performance.Finally,the paper gives some useful suggestions.