Empirical Study On The Factors Which Can Influence The Redemption Of Equity Open-end Funds

Since the establishment of the first open-end fund----"Hua’an Chuangxin" in September,, the development of open-end fund in our country has been very rapid and became one of the most important investment products. On2012, December,31, there were1149open-end funds in capital market, which had more than2807billion RMB assets. And the scale of open-end funds accounted for98%of the entire market, and was much larger than closed-end funds, which had only60billion RMB assets.Meantime, lots of redemption appears among open-end funds, which brings much negative effects on the operation and management of open-end funds, even the stability of the whole capital market. If we get the factors which can influence the redemption, we can predict in advance and reduce losses. So, it is very important and meaningful to research those influencing factors.As we all know, equity open-end fund is one of important part of open-end fund. On2012, December,31, there were521equity open-end funds in the market, which accounted for45.34%of all kinds of open-end funds. Furthermore, relative to other kinds of funds, it is easier to get data of equity open-end funds. As a result, this paper mainly research equity open-end funds in our country. Most foreign researchers found that the redemption and the historical performance of open-end funds have significant negative correlation, which means the better the open-end funds, the lesser the redemption. But in our country, most researches have the totally opposite conclusion, which is called "redemption dilemma". This paper attempts to find the factors which can influence the redemption through empirical analysis and accordingly make relative recommendation for regulatory authority, the fund managers and the investors.This paper analyzed the influencing factor in the theory aspect, and gets the main factors, including:the trend of security market, the historical performance of funds, the dividends, the size and duration of funds, the investor structure, the shareholding concentration and the redemption rates. Through the descriptive statistics and panel-data regression analysis, we get that the trend of security market, the historical performance of funds, the dividends, the duration of funds, the proportion of the institutional investors have the negative correlation with the net redemption rate. While the dividends, the size of the funds and the shareholding concentration have the positive correlation with the net redemption rate.The most important conclusion is that there are no redemption dilemma in equity open-end funds in China, which is opposite with most previous researches. And I think the contradictory is caused by three reasons. First, the data from this paper is relatively new, and include two integral economic cycles. And with the passage of time, the funds market is more mature; the investors are more rational and experienced. Second, this paper takes the lagged annual rate of return as the indicator of funds’ performance instead of the quarterly rate of return.