The Liquidity Effect On The Relationship Between The Size And The Performance Of The Equity Open-ended Fund

The liquidity of equity open-ended fund directly affect open-ended fund’strading. The less liquidity of equity open-ended fund,the more difficulty of fund’stransaction.This situation must enhance the cost of the open-ended fundtransaction,go a stept further,reduce the performance of the open-ended fund.Thistext takes open-ended fund as the research object in China form2005December to2012March.This text mainly research the liquidity of the open-ended fund how toaffect the relationship between the performance of fund and the size of fund;furthermore,when the liquidity of the fund and the size of the fund influence eachother,take this situation as a new factor of the performance of the fund,this text alsoresearch this new factor how to affect the performance of the fund.The result showsthat they both reduce the performance of the fund.This paper used the calculation ofthe liquidity of the fund by the difference between buying price and selling price andthe method of Amihud in2002.this paper use investment portfolios-factor modelwhich is based on CAPM and Cross-sectional regression model of the relationshipbetween the size of the fund and the performance of the fund.The empirical resultsshow that the less liquidity of the fund aggravate the negative correlation between thesize of the fund and the performance of the open-ended fund.Investors select funds,in considering the factors of fund also need to join theliquidity of fund,then select the appropriate funds.For fund management team,in theinvestment of some financial products,the first thing to consider is enhance theportfolio of the liquidity,choose some short-term investments to increase the liquidityof fund.