Redemption Vision Of Open-End Fund Analysis

Compares with Closed-end fund, Open-end fund has uncertain fund shares, Investors could change the fund size by buying or rsdleeing the fund shares after the open-end fund was established. Open-end fund's withdrawals can be destructive to fund operation and liquidity risk, So it is significant for us to study the features of open-end fund's redemption.Most of the existing domestic literature on the redemption behavior of open-end fund adopt fund share to calculate redemption rate, ignoring the influence of fund dividend, while foreign researchers use net cash flow to measure redemption rate, thus causing incomparable differences. Considering the actual situation in our country and using the latest data, this study adopts the foreign way by designing a new indicator (we call it "FR") to test the existence of "redemption anomaly" and the sensitivity of net purchasing rate's impact on fund return. The results show that "redemption anomaly" does exist during two periods:1st quarter,2005 to 3rd quarter 2006 and 4th quarter,2008 to 3rd quarter,2009. Meanwhile, a weakening trend of redemption anomaly is witnessed from the 1st quarter, 2007. Also, a panel data model is adopted to analyze the impact of investment performance, return volatility, unit dividend, fund size, fund expense, market yield and capital cost of investment on the net purchasing rate of open-end fund. Finally, based on the empirical results, this study provides some suggestions in response to the adverse selection of fund investor, which should be favorable for the healthy and standardized development of China's open-end fund market.