Open-end Securities Investment Fund Performance

The security market of China have got great development in the past 14 years, it have gradually grown into maturation from infantilism. The growth of security market makes the security investment funds a better circumstance to develop. After several years' development, by the end of Dec. 2004, there are 54 pieces of closed-funds and 107 pieces of opened-funds founded, and the total scale of funds has reached more than 388 billion Yuan. It is concluded that the security investment funds have been one of the important parts of the security market in China, because it plays a key role stabilizing the security market, enlarging the investment room, improving the investor's structure, and promoting the activity of the market. Therefore, more and more experts pay attention to the operation and characteristics of the funds, trying to learn the performance evaluation of funds and the infection factors. Furthermore, the funds investors need to know that whether the funds achieve their goal through evaluate funds' performance and the manager's investment skills. The funds management companies need the evaluation to find problems and improve their operation. The superintendent also needs the evaluation to make more efficient policy. So it's very important to evaluate funds performance precisely. Much research has been done on the performance evaluation of funds, and some experts abroad have set up a mature and systemic theory system through decades of hard work. But related research in China is still very primary because the security investment funds appear and exit in China for a short time. This paper examined and studied the theoretical bases and methods in evaluating funds performance, and based on the typical evaluation methods of the investment funds (Treynor performance Index, Sharpe performance Index, Jensen performance Index, T-M model, H-M model) and the practice in China, is designed to evaluate the performance of 19 open-end security investment funds from May.2003 to May.2004, and proceeded positivism analysis of the actuality of funds industry in our country. Then, made some suggestions to our security market and security investment funds. This paper includes the following parts: Firstly, elaborates the backgrounds of the topic and the cause why picks up the topic, introduces the structure and research methods of the article. Secondly, we explain the conception and characters of security investment funds, and then review the development of security investment funds both overseas and in our country. The third part analyzes the theoretical bases of funds evaluation, such as portfolio theory, EMH and CAPM, and analyzes the connection between capital markets theory and performance evaluation, then examines and studies the theoretical model and methods in evaluating funds performance, at last we introduce some former research in our country. In the forth part, we do empirical analysis of the actuality of open-end funds industry in our country, mainly analyze the funds' ability to payoff, the funds' managers' security selecting ability and market timing ability. At last, the forth part point out the problems exist in the funds industry, and give some constructive suggestions in order to make the security investment funds grow better and to improve the normal development of Chinese security market and investment. The research makes the following conclusions: (1) the data in this study is not self-correlated, which meets the requirements of the OLS method. And the methods selected (CAPM model, Jensen model, T-M model, H-M model) can be applied in the funds market in China and serve as guidance; (2) the performance of funds market in our country is better than the whole security market. But due to lack of Statisticalsupport, and it is full of high risks; (3) the security investment funds have some security selecting ability, but its market timing ability is weak. Based on the above study, and after deeply ponder, this paper gives some constructive suggestions. The suggestions include how to improve the managemen...