Analysis Of The Relationship Between Unit NAV And Performance For Open-end Equity Funds

With the rapid development of capital markets, the fund industry in our country ushered in a new stage of rapid development:sharp increase in both variety and number; rapid expansion of the scale. For many individual investors, especially ordinary families, funds have developed to be the most preferred financial tool. But it's not easy for investors to select funds that suit their needs from different equity funds with high or low net asset value per share (unit NAV), due to the serious convergence of name and investment style in the fund market.Fund Performance evaluation is the study of that whether the fund's performance is more than the market average earnings. And is there any kind of relationship between unit NAV and the performance and the performance persistence? The objective of this study is to solve the debate from practitioners that which of open-end equity funds with different levels of unit NAVs should be selected by investors. This study examines the relationships between unit NAVs and both the further long-and short-term performance and the performance persistence for open-end equity funds from 2008 to 2010. The chosen methods include the equality tests of various performance indexes (the original ROI, the OLS model regression value of Jensen's alpha index measured with FF three-factor model) with three sub-period and the throughout the period analyzed separately on the basis of the classification in accordance with different level of unit NAVs.The findings are as follows:there is a strong explanatory power for NAVs to future performance; investors should stay away from the fund market or at least from fund with the maximum level unit NAVs when bear market comes, and try to hold the Medium slightly high level unit NAVs when bull market comes or in nubilous adjustment markets.