An Empirical Study On Factors Affecting The Yield Of Open-ended Funds

There has been an upsurge in securities investment funds, which mainly consists in investment in stock funds and mixed open-ended funds. Based on the 42-month data of 41 stock funds and mixed open-ended funds raised before Dec. 31st, 2003 from Dec. 31st, 2003 to June 30th, 2007, the study examines whether they have showed good judgment on selection of stocks and market-timing as well as to what extend such factors as the scale, expense ratio, stock ownership convergence, funds type, investment type and stock selectivity affect the yield of funds. The research involves three types of empirical analysis including group contrast analysis, T-M stock selection and market-timing analysis, and the multiple regression analysis defining the fund yield during the period of assessment as dependent variable and as independent variables the scale, expense ratio, stock ownership convergence, funds type, investment type and the stock selectivity. The results of the empirical analysis indicate that the yields of the stock funds and mixed open-ended funds are better than the market average. Fund managers show fairly good performance in their stock selectivity, but obvious weakness in market-timing. Stock selectivity, stock ownership convergence and the fund type show a greater influence on the yield of funds, whereas the expense ratio, investment type and the fund scale have relatively little effect on the yield. There is has a positive correlation between stock selectivity and the yield, while stock ownership convergence and the fund type have a negative correlation with the yield.