ICA Based Study On Influence Factors Of Close-End Funds Fluctuation

As the Chinese stock market is being gradually perfected, the institutional investors play a more important role in our stock market now. Although the market share they occupy is not as many as that in the developed countries, they still have a big impact on the volatility of the stock market, therefore, the volatility of securities investment funds has drawn much attention now. As one type of the securities investment funds, close-end funds entered into Chinese stock market very early and developed well. After living through prosperity and recession, close-end funds have come back to people's vision.It has significant sense in regulating the stock market and guiding investors to excavate the factors influencing the price volatility of close-end funds. Firstly, the decision makers of the stock market would like to keep the volatility stable and within a narrow range, and close-end funds could function as stabling and developing the stock market; secondly, it could help Fund Management Corporation to analyze and control risk; lastly, it could help investors cultivate a sense of investment, make their investment more effective.This research aims to find out the factors influencing the price volatility of close-end funds and screen out them to help all the people involved in the stock market. Moreover, in this paper, the employment of ICA in analyze close-end funds could examine whether ICA could be used to analyze the financial assets which may could be of some help to further research.This article addresses the concept and the characteristics of close-end funds, then illustrates the basic principles and methods of ICA (independent component analysis) and manages to find the reasons of Close-end Funds Fluctuation by ICA. In this study, investor sentiment, inflation, net asset value of close-end funds, volatility of stock market and business cycle are found to explain the volatility of close-end funds. Based on these findings, some suggestions are also being given: compared to the stock market, the volatility of close-end funds is much stable, therefore, keeping and enriching close-end funds to some extent have some positive influence on the development of stock market, To the investors, they could invest in some close-end funds to get profits at the same time to avoid risk, especially to the risk averters; after getting a clear idea of the sources of risk, Fund Management Corporation could adjust their investment policy and improve their risk management level.