Study Of Open-end Fund Investment Style

Mutual funds taken as an investment instrument have been palying a more and more important role in the Chinese financial market. In China, mutual funds themselves have become the most important investors, who are not only optimizing the investors'structure in the Chinese security market but also promoting the value investment concept to the public. At the same time, they are very active in taking part in bond market and repurchasing market to become a powerful force in the Chinese financial system's reform and innovation.In this paper,we use style analysis in a a sample of 20 China-based domestic investing out-ended funds over the period January 2005 through December 2010.The out-ended funds data are obtained from Wind's Principia Pro database.Both from the theoretical and from the empirical analysis, we find that estimated style exposures may deviate from portfolio holdings. Actual portfolio holdings are better predictors of future portfolio holdings than estimated style exposures are. This paper explains the result of empirical research from liquidity risk and the behavior of fund manager. And then it gives some useful suggestions as answers to the deviations of investment styles.