Comparison Of Investment Behavior Between QFII And China's Security Investment Funds

Nowadays,QFII play a more important role in domestic security market than everbefore with wider investment amounts and stronger investment strength. But in themeanwhile,China's security investment funds,institutional investors as bellwethers,also experience a period of prosperity. Whether differences in development history,investment strategy and state of system lead to the diversity of investment style betweenQFII and China's security investment funds or not,the paper aims at finding out thedifferences in investment style and the real reasons causing these differences,and thenintroduces pertinent suggestions,which matters for the development of not only two ofthem but also domestic financial market.Because of reasons above,the paper makes a thorough analysis in investmentportfolio and investment style between QFII and China's security investment funds,andthen comes up with sound advices for domestic financial market,QFII and China'ssecurity investment funds with the consideration of development history and state ofsystem of QFII and China's security investment funds. Main contents are listed asfollows:The first part is literature reviews,which summarize the existing research results ofthe field on which the paper focuses. Development background,process,status in quoand models of behavioral finance as well as research results found by institutionalinvestors at home and abroad are involved in the first part.The second part contains thorough analysis of system between QFII and China'ssecurity investment funds. The section of development of QFII compares QFII inmainland with QFII in Taiwan,in which QFII's system has been put in practice for manyyears. In the other section,three phases of development of China's funds,old funds'era,closed‐end funds'era and open‐end funds'era are respectively analyzed.In the third part,the analysis of their respective asset allocation is presented,which contains their respective analysis of investment in A share market,convertiblebonds and national debts,and analysis of QFII's funds investment is also involved. Inthe recent years,QFII do a better job in judging macro‐economy situation in comparisonwith China's security investment funds,and QFII hold more convertible bonds andnational debts in their asset allocations. In addition,QFII show great interests in China'ssecurity investment funds in initial entrance to mainland market. However,withgaining more knowledge of mainland stock market,QFII cut sharply china's fund from their asset allocation.The content of the fourth part is analysis of investment style between QFII andChina's security investment funds. The analysis starts with three aspect: industrystrategy,preference of stock‐selection and independence of investment. In the section ofindependence of investment,LSV method,which is widely applied in analysis ofherding effect,is introduced in order to check out the underlying phenomena. Based onresearch results,the paper finds that QFII hold greater proportion of stocks of industriesowing traditional advantages in their asset allocations. Different from QFII,China'ssecurity investment funds prefer the companies of finance and insurance. In the aspect ofpreference of stock‐selection,QFII switch their investment priorities,which initially ismega‐issues in international financial market,to middle disk stocks and low‐mediumprice stocks. By contrary,the first twenty bulk‐holding stocks of China's securityinvestment funds mainly contain mega‐issues and low‐medium price stocks. Besides,loading results by LSV method with references,QFII show no higher independencethan China's funds.In the fifth part,the paper summarily items the differences of investment stylebetween QFII and China's security investment funds,and figures out the underlyingreasons of diversity.In the sixth part,on the basis of analysis mentioned above,some suggestions ondomestic financial market,QFII and China's security investment funds are presented.