Research On Effect Of Characters Of Fund Management Company And Fund Manager On Fund Performance

Since reform and opening up,China's economy grows rapidly.According to total GDP,China has been the second biggest economy in the world;according to GDP per capita,China has been one of the middle-income countries.The total savings deposit is more than 70%of the GDP.In the household finance assets of the residents,savings deposit and cash is more than 75%,but financial products such as security and fund is only less than 25%.Developing the industry of wealth managing both meets the demand of China economy which has been the middle-income stage,and meets the demand of improving the property income of residents and build a well-off society in an all-round way.As a part of the industry of wealth managing,the fund industry has been developed rapidly in China,but there is big gap from the developed countries such as American,England,and so on.Since it became from "the old fund" to "the new fund" in 1997,the fund industry is developing the most rapidly in all the financial industries.The fund management company usually takes "fund manager responsibility system under the leadership of investment decision committee" for the fund's operation and management.When fund investors buy fund shares,they usually take characters of fund management companies and fund managers into account.Then,whether will the characters of fund management company and fund manager affect fund performance?Which characters of fund management company and fund manager will affect fund performance?And how will the characters of fund management company and fund manager affect fund performance?This dissertation uses methods such as history analysis,induction and econometrics and so on.Based on the literature review,the dissertation describe generally the characters of fund management companies from shareholders,share structure and internal governance structure and the characters of fund managers from physiology,education,certification and experience firstly,and indicates that the fund management company and fund manager of different fund has different characters.Secondly,this dissertation chooses 140 stock-based open-end funds as research samples,sets intervals from July 1 2004 to Dec.31 2015,then calculates their performance as the explained variables.Thirdly,the dissertation induces ten hypotheses on the effect of characters of fund management company and fund manager on fund performance.Fourthly,the dissertation tests the hypotheses on effects of the characters of fund management company and fund manager on fund performance empirically.Finally,the conclusions and suggestions are raised.Firstly,different fund management company and fund manager has different characters.General characters of companies from shareholder,share structure and internal governance structure are:(1)shareholder pluralism.In the beginning,only security company and trust company can be important shareholder and sponsor;then commercial bank,insurance company and investment company can be;now the foreign capital,industrial company and natural person can be;(2)different fund management company has different share structure,and share structure of one company can change,it shows that the absolute holding company is main and the relative holding is second,and dispersed ownership is only less than 10%:(3)internal governance structure is diversified,the basic framework is same,every company has board of directors,board of supervisors,independent directors and inspector general.but the size of boards,the proportion of independent directors are different.General characters of fund managers from gender,age,education background and experience are:(1)male fund managers are much more than female fund managers,but the proportion of female fund managers is increasing;(2)most of fund managers are young;(3)the education background are good,and most of them are master or doctor and graduate from the famous university;(4)the working experience is not long generally.Secondly,the first shareholder's nature,joint-venture,share structure and internal governance structure can affect fund performance.(1)The first shareholder's nature,share structure,the proportion of independent directors of board of directors and size of board of supervisors can affect fund performance and fund return significantly,but joint-venture,size of board of directors and whether general manager being director will not affect fund performance and fund return significantly.the first shareholder's nature,joint-venture and size of board of supervisors can affect fund risk,but share structure,size of board of directors,and proportion of independent directors whether general manager being director will not affect fund risk.(2)The nature of first shareholder will affect fund return,performance and risk.Compared to the fund managed by company which first shareholder is not security company,the fund managed by company which first shareholder is security company has lower return,lower performance and lower risk.Compared to the fund managed by company which first shareholder is not trust company,the fund managed by company which first shareholder is trust company has higher return,higher performance and higher risk.Compared to the fund managed by company which first shareholder is not commercial bank,the fund managed by company which first shareholder is commercial bank has lower return,lower performance and higher risk.(3)The joint-venture fund management company has significantly higher total risk and unsystematic risk.(4)The fund return and performance is negatively relative to share structure of fund management company,and the higher the share structure is,the lower the fund return and performance.(5)The fund return is positively relative to the proportion of independent directors in board of directors.(6)the fund return,performance and risk is negatively relative to size of board of supervisors.Thirdly,the gender,education background and experience can affect the fund performance.(1)When studying the effect of fund manager's characters on fund alone,the gender and experience have no significant effect on fund return and performance,the education background has significant effect on fund return and performance;the gender,education background and experience have significant effect on fund risk,but have no significant effect on total risk,systematic risk and nonsystematic risk all.When studying the effect of characters of fund management company and fund manager on fund together,the gender of fund manager has significant effect on fund performance,and fund managed by male manager has higher performance.(2)The fund managed by male manager has lower systematic risk.(3)Compared to the fund managed by master and lower educational background,the fund managed by doctor has lower return,performance and nonsystematic risk.(4)The fund risk is negatively relative to experience of managers,that is,the experience of fund manager has important role in controlling the fund risk.We can derive some policy suggestions and revelations from theoretical analysis and empirical result for fund industry supervision department,fund management company and fund investor.Firstly,some policy suggestions for fund industry supervision department can be derived.(1)The supervision department must strengthen supervision and law enforcement,especially the relative exchange between fund management company and its shareholders must be prohibited.(2)The regulation of fund industry must be loosened,especially the entering regulation.(3)The mode of fund operation and management that fund management company,fund manager and fund shareholders have relative interests and incentive compatibility can be explored,increasing the fund return and fund performance.The staffs of fund management company----including directors,general managers and fund managers----can be the fund shareholders of fund managed by them.The managerial fee of fund should be relative fund return and performance,not only to fund net value.Secondly,some revelations for fund management company can be derived.(1)The company will not necessarily introduce the foreign capital to form joint-venture.from fund return,performance and risk.(2)The company should lower the ownership concentration from the fund return and performance.(3)The company should raise the proportion of independent directors in board of directors and lower the size of board of supervisors from the fund performance.(4)The company should think highly of the fund manager's educational background and experience,choose the manager who has the higher education degree and longer experience.Thirdly,some revelations for fund investor can be derived.(1)They should think highly of the nature of first shareholder,joint-venture,share structure,proportion of independent directors in board of directors,and size of board of supervisors,the size of board of directors and whether manager general being director are not important.(2)The gender and educational background of fund manager are important and experience is not important from the return and performance,but from the fund risk,the three facets of manager should be thought of.The dissertation has three facets of innovation.Firstly,the dissertation studies the effect of characters of fund management company and fund manager on fund performance together.The literature that has been published studied the effect of characters of fund management company or fund manager on fund performance alone,there is few literature that study characters of fund management company and fund manager together.The dissertation studies respectively the effect of fund management company or fund manager,then studies the effect of them together.Secondly,the dissertation studies the effect of nature of first shareholder of fund management company on fund performance.In the literature that has been published,there are some literatures that study the effect of nature of shareholder of fund management company on fund performance,but they studied the effect of security company as shareholder of fund management company on fund performance,they either use dummy variables or use the share proportion of security company as the explaining variables.The dissertation uses the four models to study the effect of nature of first shareholder on fund performance respectively,using the dummy variables whether the first shareholder is security company or not,is trust company or not,is commercial bank or not,is not security company,trust company and commercial bank or is.Then based on the four models,the dissertation adds the joint-venture,share structure and internal governance structure to the basic models to study the effect of characters of fund management company on fund performance totally.Thirdly,the dissertation studies the effect of board of supervisors on fund performance.In the literatures that studies the effect of internal governance structure on fund performance,they thought highly of the size of board of directors,proportion of independent directors in board of directors,whether the manager general being director or not,but there are few literature that studied the effect of board of supervisors on fund performance.The dissertation uses the size of board of supervisors as explaining variable to study the effect of board of supervisors on fund performance.