The Reason Analysis Of Fund Investment Style Drift From Fund Manager's Overconfident Perspective

Previous studies have concluded that the real investment style during their operation period is inconsistent with the nominal style which is promised in the fund's recruitment instructions in most funds,that is,the drift of investment styles.Which is essentially a kind of default behavior of the fund.In regard to the motivation of fund investment style drift,most of the previous studies are based on the hypothesis that a fund manager's behavior conforms to the Bayesian rule of " rational economic man ".That is,the fund manager's investment decision is based on the fund or fund investor's utility maximization goal.The premise neglects the influence of the psychological characteristics of fund managers on the drift of fund investment style.The research in this paper filled this gap.It introduces fund manager overconfidence into the reason analysis of investment style drift.The purpose of this paper is to build a panel model to analyze the reason of the domestic open-end fund investment style drift from the fund manager's overconfidence perspective.First of all,this paper proposes two targeted assumptions about the influence of fund manager's overconfidence on fund investment style drift through theoretical research,and then selects 100 open-ended funds which established before 2011 as research samples.The sample funds belong to 59 fund companies.The study period is from January 1st,2011 to June 30 th,2017,which is divided into two sub-ranges: “The rising stage of the securities market” and “The decline stage of the securities market”.The panel model is used to empirically test the hypotheses which is proposes in the previous article.This paper finds that the overconfidence of fund managers has a positive correlation influence on the fund investment style drift.The higher the level of the fund manager's overconfidence,the greater the drift of the fund investment style,and vice versa.This indirectly explains the fund managers do not fully conform to the "rational economic man" assumption,and fund managers are limited rational rather than completely rational.Furthermore,this paper argues that in different securities market stages,the impact of the fund manager's overconfidence on fund investment style drift is inconsistent.In the securities market as a whole,the fund's previous or historical performance is relatively well.Fund managers may be more likely to lead to overconfidence due to “self-biasing biases” and “overoptimism”.At the same time,the influence effect of overconfidence is also expanding.That is,the improvement of the fund performance caused by the rising stage of the securities market will expand the effect of fund manager's overconfidence on the fund investment styles drift.