Empirical Research On Stock Holding Preferences Of Securities Investment Fund In Our Country

Through about 20 years' development, the securities investment fund, represented as one of the most important institutional investors in the security market, has been regarded as significant as banking, security and insurance industry in China finance market. It promotes the healthy development of the security market and completes China's financial system. With the growing importance of the status of the Fund, its investment behavior has been noticed and researched by more and more investors, as well as the regulatory authorities. This paper will use empirical method to examine the holding share partiality of the securities investment fund.First of all, this paper gives the background and the summary of the status quo of the topic, which we will research in the following chapters. And then the author explains the target, method and procedure of this study. On this basis, a brief introduction of China's Securities Investment Fund' s history and development is proposed.Then, we introduce theories of the Fund's investments, as well as the principal-agent theory. After that, this paper lists the preference for stocks on the fore theories basis. Also this article studies the preference based on the different classification. In this paper, we choose semi-annual data of the listed companies, which are held by the securities investment fund, to analyze its preference of share holding. Of course, the fund is authorized to invest in the A shares stock market. The data is from the beginning of 2004 to the end of 2007, with total 21 explanatory variables belonging to three aspects including stock performance, company fundamental performance and company characteristics. Also we cut the time period of the study sample into two, bear market period (2004. 01-2005.06) and bull market period (2005.06-2007.12). We mainly use the multiple regression method to verify whether the selected variables are significant or not, so we can analysis the preference of the fund management corporations. Also this study examines the preference of fund belonging to different classification.We have found that fund managers (that is, the fund management companies) are concerned about the stocks' market performance. However, fund companies don't pay much attention to the indicators of the listed companies' fundamentals. Though fund chooses stocks with high return on total assets, and in the bull market it selects shares whose BPS (net assets per share) is high, reflecting the cautious investment. However, on operating income growth rate and earnings per share, the fund's selection doesn't show prudence according to professional standards. The Fund holds stocks with low earnings per share and low operating income growth rate. And fund management corporations prefer to hold Shanghai and Shenzhen 300 Index constituent stocks. Also we find that these different fund managers appear homogeneous on the investment behavior.