| Investment funds in Securities are one of the main participants in the Chinese capital market. And at the same time they are also important investment tools. The open-end fund market is gradually becoming the domestic mainstream. At present, Chinese fund industry is facing increasingly fierce competition, mainly reflected in growing number of market participants, diversification of investment vehicles, broader choices of investment channel, etc. Moderate competition can enhance the fund efficiency, reduce the cost of investment, and create more value for investors. Thus, it not only attracts more investors and capital into the securities investment fund market and increases the volume of the fund market, but also regularizes the behavior of the fund market and promotes the overall development of the securities investment fund market. However, with growing number of market participants, diversification of investment vehicles and investors’"vote with their feet" behavior backed by redemption-mechanism, fierce competition can lead to increasing pressure on the pricing of funds.This paper introduces the degree of market concentration to study the competition level among industry, and it analyzes the impact of competition level on the pricing of funds. The study on the open-ended equity funds between2001and2011shows that the pricing of the funds is negatively correlated to fund market competition level. In other words, the cost of fund investment reduces with increasing fund market competition level. Thus, it is concluded that competition among industry reduces the cost of fund investment and attracts more investors in current domestic fund market environment. At last, basing on empirical research and the reality of domestic securities investment fund market, this paper gives policy recommendations on existing problems to enhance the competitiveness of the fund companies and to promote the development of securities investment funds market. |
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