Research On The Differences Between Sole- And Team-Managed Funds’ Investment Strategies

During recent years, with the rapid development of China’s capital market, open-ended funds have been at a dominant position in securities investment funds industry. When compared with researches in Western countries, our studies on fund management structure and investment strategies are still at a deficient stage. So we study the differences between sole- and teammanaged funds’ investment strategies based on a sample of 2008 open-ended funds during 2005~2012, then we examine the economic results and investors’ reactions. We further study the impact of Yi-Tuo-Duo- a particular phenomenon in our fund industry- on the investment strategies of sole- and team-managed funds.We firstly find that sole-managed funds are prone to take market-timing strategy and have better market-timing performance, but team-managed funds are prone to take stock-selection strategy and have better stock-selection performance. Then we find the poor market-timing performance of team-managed funds is not the result of lacking in market-timing ability but coordination cost which corrupts the market-timing performance. For team-managed funds, the profit from specification can’t make up the corruption. But the market-timing profit for solemanaged funds can offset the loss of specification deficiency. Furthermore, investors would reward sole-managed funds’ market-timing ability and stock-selection ability, rather than teammanaged funds. Finally, our tests show that sole-managed funds of Yi-Tuo-Duo exhibit stronger market-timing ability, expecially for sole-managed funds whose managers manage stock-leaning funds at the same time. Yi-Tuo-Duo causes damage to fund performance, expecially for teammanaged funds. However, investors haven’t known this damage clearly, and it shows investors in our country are not rational enough.