Slant Type Open-end Fund Redemption Vision Research In China

As one of the main investment tools in capital market of China, open-end fund has developed rapidly in recent years. But the relationship between performance’s change and net redemption rate’s change in Chinese open-end fund market is the same direction, which is different from developed countries. This phenomenon is called "redemption dilemma" that makes the redemption mechanism loss function, increases liquidity risk of open-end fund and aggravates the fluctuation of market. And it will disturb the market order, which is not conductive the healthy development of fund market.On the basis of the background, this article studied the "redemption dilemma" of China’s stock-based open-end fund, using the analysis method which combinates qualitative and quantitative analysis, and corroborates theoretical analysis and empirical test. Using behavioral finance prospect theory, the article analyses the decision mechanism of open-end fund rationality and irrationality.And combining with China’s market characteristics, the article puts forward about related propositions of China’s stock-based open-end fund redemption dilemma. Through28quarterly datas of27stock-based open-end funds which established before the first quarter of2004, it proves that the redemption dilemma of Chinese open-end fund can be explained by disposition effect, mental account and investors overconfidence, and finds that in bull market "redemption dilemma"is more serious than the general situation. In order to reduce the occurrence of redemption dilemma, this paper offers some advices. It is helpful to guarantee fund share and stable development of the market, which have important significance to fund managers, investors and regulators.