The Effect Of Equity Fund Managers’ Characteristics On Their Portfolio Risk

Security investment fund is one of the major investment tools in capital market.After years of research and practice, China’s funds market has developed maturely,and funds has been generally approved and accepted by investors. Furthermore, fundis a compositive investing method; the investors, funds management companies andfunds managers develop a principal-agent relation bound by trust. In particularly,funds managers play a significant role among the three parties. Funds managers, whomake the decisions on investing strategies and investment area, control all the fundscapital and take full responsibility on the change of the funds value. For equity-funds,the fund managers choose hedging and stable portfolio among stocks. Also,depending on the fund amount, each fund can only invest in limited number of stocks,and also, the stocks types and investment proportion are different, so as the funds risk.The funds managers take positions depends on their own risk preference, but the riskpreference comes from the investors’ personal characteristics. Therefore, managers’characteristics can affect the funds risk. Moreover, it has been approved thatmanagers characteristic affect the investing sentiment by behavioral finance emergingin1960s-1970s. In2008, the world wise financial crisis has influenced our capitalmarkets, which entered into investment downturn, and the stock market suffered inthe phase of bear market, so as the funds market. Consequently, risk control hasbrought a huge attention and discussion. If the funds manager can survive in currentphase of market with remarkable risk management skills, he/she will certainly gaintons of trust. The investors’ faith and mood will be benefit from the outstanding riskcontrol strategies. The economy will recover soon, and the capital market couldoperate smoothly because of it.This thesis chooses physiological characteristic, education background, technic level and professional career background as the factors that affect the systematic risk,general risk and extreme risk for equity-funds, and present a comprehensive research.From the data, this thesis adopts a different method from other studies regarding theissue of managers changing problem. Both sample size and managers-consistenceissue can be solved here. Unbalance panel data model with fixed time effect is used inthis research, and the estimated result is tested with period cross regression method.Based on the study, we found female fund managers or ones with high-level technicperformed better at risk management, the CPAs outperform their fellows onsmoothing the volatility, and CFAs outperform their fellows on tail risk management.Other personal factors such as working period, working aboard experience or havinga MBA program are not significantly related to equity-fund risk.