Study On Relationship Of Mutual Fund Performance And Style Drift In China

As China's economy sustained, steady and healthy development and all kinds of reform measures advanced steady by the gradual market-oriented reform of the direction of progress, China's capital market developed rapidly in recent years. Because of the rapid development of China's capital market, fund sales is really hot, asset size goes up rapidly and China fund industry have begun to grow up quickly, which scale of growth is up to 241 percent. China's securities investment fund industry has become the fastest growing financial markets in the financial sub-sectors. Up to the end of Oct, 2007, as China's second largest financial sector, China's asset size of securities investment fund has gone beyond the insurance industry.In recent years, although China's capital market has had a big development, but it has been still in the emerging stage of transition in sum, some institutional problems still existing in the securities market. When we analyze the regulatory regime of fund's or other institutions'investors, the current situation, which seriously depends on administrative supervision, has obviously can not adapt to the rapid development of capital market requirements, and fuzzification and generalized of the investment regulations in the fund Contract remain the way for funds illegal operations.Base on the relevantly summarized research of domestic and foreign funds, the study use the factor analysis to determine the short-term stability of sample fund-style, and thus analysis of the Fund's market behavior from the Fund-style by using information economics. At the same time, with many performance models, the paper made a survey of the relationship between Fund style drift and fund performance, which was also investigated the relationship between fund performance and fund-scale changes,changes in capital flows,management fees and other variables.The results show that China's open-end funds have a clear style drift during the operation, which has a complicated process. The research measured the extent of the fund style drift by the indicator of the style drift scores (SDS). Results showed that the Market growth funds'average SDS is the highest and style stability is the worst; at the same time, the test result also shows that the fund performance and fund style of the stability has relevance, but the relevance is uncertainty. The research found that fund performance is not related to the funds flows; fund performance and fund size are related; fund size and management fees rate has a negative correlation.