China Open-end Securities Fund Net Redemptions Empirical Study

Compared with Closed-end fund, Open-end fund has uncertain fund shares. Investors could change the fund size by buying or redeeming the fund shares after the Open-end fund was established. Open-end fund's withdrawals can be destructive to fund operation and liquidity risk, so it is significant for us to study the influence factors of open-end fund's net outflows. Open-end fund's net outflows would be influenced by many factors, we must consider these factors overall when we want to predict or analysis the sum of net outflows.Based on the theoretical and empirical studies at home and abroad, this paper classifies the net outflows' factors into four sorts, including security market level, fund performance, investor structure, and other fund features.We make an empirical study on these factors using all time deta and conclude as follows. Security market level is negative relevant to the redemption ratio.Also, net asset values (NAV) , dividend and fund size are negatively correlated to the redemption ratio too. Institution investors have great influence to the redemption ratio. In addition, the paper makes a uniform regression using 16 variables in the second half year of 2004.The conclusion shows that partial-stock funds' best redemption ratio influence factors are NAV growth rate, purchase fee rate, average hold shares, previous period dividend and present period dividend. And partial-bond funds' best redemption ratio influence factors are fund size and previous period redemption ratio.Finally, the paper gives some suggest to improve the high and continuous net outflows status in our country.