The Empirical Study In Stock Picking Ability And Market Timing Ability About Chinese Private Fund

<Private equity investment fund and the fund registration record way>implemented in 2014 February. In May the State Council issued the "opinions on further promoting the healthy development of capital market". The separate lists of cultivating the private market, establish and perfect the system of private placement, the development of private equity investment fund. The policy has been liberalized, private equity funds have legal status, the private equity funds can record the issuance of products, private equity funds may enter the spring. As of 2014 August, filing system implementation of less than 8 months, the record of private equity products reached1000. Recent months have 1301 private equity issuance. In recent years, with the opening of policy, private fund is developing very fast. So the private fund investment ability of empirical research is necessary. This paper mainly studies the stock selection ability and market timing ability of private equity funds.Stock picking ability find stock will rise, and rely on continue to identify these stocks so as to enhance the performance of the fund. Timing ability is the ability of dynamic asset allocation. If the fund managers believe that the market will fall, he will sell stock and then buying fixed income bonds. Through the timing ability raise performance promotion. If the fund managers believe that the market may rise, he would buy the price elasticity of large stock, so get excess return in the market prosperity.In this paper, the T-M-FF3 model is used to study the private fund stock selection ability and market timing ability. Because of public information will affect the fund manager investment decision which influence stock selection ability and market timing ability, so this paper put the market sentiment into the model, a new model is constructed. In this paper, an empirical study on the private placement fund excellent selectivity and timing ability, the study period is from January 1, 2008 to May 17, 2013.This study found that private equity fund with timing ability, stock selection ability as a supplement. There is a negative correlation between the private fund stock selection ability and market timing ability. Private equity funds are less likely to have security selection ability and market timing ability. To improve the T-M model fitting degree improved significantly by adding control variables, explanatory power is stronger at the same time. In this paper, the comparison of different groups of private equity funds. Thestudy found that the best performance is the stock picking ability group, followed by the market timing ability group. Private equity funds do not have security selection ability and market timing ability is the worst.In this paper, the empirical study on private placement fund stock selection ability and market timing ability, therefore, put forward some policy suggestions about private equity fund. Private equity fund is a good institutional investors also have good operation system and incentive mechanism. Therefore, the government in the formulation of the new "Securities Law" should give private equity fund legal identity,which can promote the prosperity of China’s securities market. Private equity funds with good selectivity and market timing ability, the Commission should give private equity equal market position. The CSRC requires more perfect supervision on private fund,referring to the public offering of the fund’s regulatory system, so that the private equity fund operations more sunshine, transparent, standardized. The government should increase investment products, optimize the transaction mechanism, so as to realize the long-term stability, prosperity.