Analysis Of Performance And Influencing Factors For Equity Funds Based On Composite Indicators

As one of the popular investment methods,the fund is gaining increasing attention from investors.However,with the increase in the number of funds and the scale of investors,the potential risks in the fund market are gradually becoming prominent,especially for high-risk and high-return equity funds.Therefore,conducting in-depth research on the factors influencing fund performance is of great significance in accurately measuring fund performance.In terms of theoretical research,this article first reviews the literature on fund performance and influencing factors,both domestically and internationally.From this review,I select evaluation indicators that accurately reflect fund performance,including return indicators,risk indicators,and risk-adjusted return indicators.Next,taking into account the characteristics of Chinese fund market and the classification of equity funds,I divide equity funds into three categories: general equity funds,passive index funds,and enhanced index funds.Furthermore,356 funds are selected as the research objects,using nine indicators including annualized return rate,volatility,Sharpe ratio,Treynor ratio,and others as performance evaluation measures for the funds.Through factor analysis,I identify two main factors with strong explanatory power: the return factor and the risk factor.The model is established to explore the relationship between these two main factors and the original performance indicators.The study finds that comprehensive evaluation indicators for the return factor and the risk factor can be constructed for the overall sample of equity funds and the three sub-samples.In terms of empirical research,I treat the return factor and the risk factor as the dependent variables,which are the composite performance indicators.I select eleven explanatory variables including fund age,fund size,fund manager’s education level,stock selection ability,and others,to conduct in-depth research on the overall sample of equity funds and its three sub-samples.Using multiple linear regression analysis,this study draws the following conclusions:(1)Fund age,fund size,management fee rate,investment concentration,and stock selection ability have a positive impact on the return factor of equity funds,while number of managed funds and the performance of the target index have a negative impact.(2)Fund age,management fee rate,and fund manager’s education level have a positive impact on the risk factor of equity funds,while fund size,investment concentration,stock selection ability,and number of managed funds have a negative impact.(3)Compared with the comprehensive performance indicators derived in this article,single performance indicators have limitations in the analysis of influencing factors,leading to the diminished significance of important factors such as fund size and investment concentration on fund performance.(4)Through studying three sub-samples of equity funds,it is found that even within the same fund type,there are differences in the factors influencing the return factors and risk factors.Moreover,for the three sub-samples of equity funds,the influencing factors of the return factor and the risk factor also show differences,which are caused by different investment strategies.Finally,taking into account the conclusions of this article and the current state of the fund market in China,I propose relevant recommendations for fund managers,investors,and market regulators to promote more effective fund performance management.