Research On Scale And Performance Of The Investment Funds

Chinese investment funds grow quickly that the number of opened-funds has reached 100 from 2001 to 2004 and the largest funds is over one million. But, large funds aren't better than small funds in net-returns, are there advantages to larger fund size? Does fund size affect performance? There are some academic research has been done in overseas and there appears to be disparate views among practitioners on the issue. Moreover, it has received little research attention in China. In this paper we examine the effect of fund size on performance. We look at closed-funds from 2002 to 2004 and use twelve indexes to measure fund performance. We split funds to large-cap,mid-cap,small-cap and use distributing of indexes ,Average-returns tests, One-way ANOVA analysis and Factor analysis to test for differences in performance for three size funds. We don't find statistically significant differences in performance for large-cap, mid-cap and small-cap funds. It seems fund size doesn't drive performance. Base our study we analyze the reason why fund size doesn't drive performance, such as celerity, liquidity and give advice. In addition, we mention some problems in present fund market when gross scale of funds become more and more large and also give advice.