A Empirical Study Of The Influential Factors On The Change Of The Scale Of Open-end Funds In China

As investors can buy or redeem the open-end fund shares freely, the fund scale is constantly changing. It can be destructive to fund liquidity management and fund operation, especially when continual and substantive redemption happens, not only the fund operation will be affected severely, but the financial market will also be confronted with drastic fluctuations. Therefore, it is significant for us to study the influential factors on the change of the scale of open-end funds as well as the degree of such influence.Based on the theoretical and empirical studies both at home and abroad, this paper makes detailed theoretical analysis of all the factors that may affect the scale of open-end fund in China. The panel data of 46 pieces of partial-stock funds and 16 pieces of partial-bond funds (from the forth quarter of 2004 to the second quarter of 2007) are individually chosen to build two econometric models to reckon the effect and the influential extent of all factors. The main conclusions of this empirical study include: (1) relative performance of open-end funds has positive influence on fund scale. Investors prefer to hold and buy the funds which have excellent performance. This proves that there is no so-called'redemption puzzle'; (2) security market reward is distinctly positive relevant to fund scale; (3) the net value of funds is negative relevant to the change of current fund scale, while the lags are positive relevant to the change of scale; (4) share ratio of institutional holders has negative influence on the change of scale; (5) the supply of new funds is negative relevant to the old funds, etc. These conclusions provide a guide for fund managers to forecast the change of scale and adopt corresponding measures accordingly.