China's Open-end Fund Redemption Of Vision Research

During 2003 and 2004,the performance of open-ended funds in China was better than the performance of stock market, but the investors made adverse select—they redeemed funds when price rose. This article explored the reasons that cause this phenomenon.This article studied this phenomenon from two aspect: Principal-Agent Theory and Prospect Theory. Then This article make a conclusion through empirical analyze which employed Multiple Regression Model.This article make a conclusion like the following: first of all, the investors redeem funds which price rise for loss aversion. In view of the pre-experience of stock market, the investors believe that the open-ended fund market would similar, so they redeem fund for obtained gain. This behavior called Disposition Effect in fund market. The second, the dividend restrains the redemption depends on the investors regard it as maintain value account, the dividend is not only extra gain but reflect the future good performance. Then, investor sentiment is the most important factor of this abnormal redemption. The last but not the least, the redemption of bonds open-ended fund was more than stocks open-ended fund that show the performance of the former was over- performance the latter.The creation of this article lies in employ and quantity the index of investor sentiment, furthermore this article explain this abnormal redemption by Behavior Finance.