Study On Fund Manager Timing And Picking Skill

With the increasing demand for investment, fund has been favored by more and more investors. Since the stock fund solves the problem that investors are short of energy and professional skills to carry on the stock investment, it is in the trend of booming. Using the proper method to evaluate the fund manager's performance and identify skilled fund managers is of great significance for investors and fund companies.The fund stock selection ability and market timing ability, which have been widely studied, are often regarded as the fund manager's inherent skills. But in fact, market timing and stock selection skills are not talent, but fund managers spending time analyzing the information. Fund managers may choose to focus on different information at different points of time and thus showing different aspects of their ability.The aim of this paper is to analyze how the state of the economy (expansion or recession) impact on fund manager's performance. This paper selects 270 open active management stock funds as its research object. The research period is from 2006 to 2014. In this paper, a new method to calculate two kinds of abilities of fund managers is used, which has statistical power. And I divide the business cycle using the HSBC purchasing managers' index and macroeconomic prosperity index.This study found that the real economy will affect the fund manager's strategy. Specifically, when the economy is prosperous, the fund manager is more focused on stock selection. And when the economy is in recession, they will pay more attention to market timing. What's more, the more skilled the fund managers are, the more sensitive they are to changes of the economy.By empirical study, this dissertation obtains another conclusion:fund managers who show excellent stock picking ability in expansion also show excellent market timing ability in recession.At the end of this paper, I put forward some suggestions for researchers, fund companies and investors separately according to the conclusion I get above. At the same time, the last section also gives the valuable future research directions.