The Spillover Effect Of Star Funds

With the development of the fund industry,the fund industry is showing a trend of family development.Since the growth rate of funds is much faster than that of the fund companies,which makes the fund no longer be a single individual but be a family member.Star funds whose return in last season were in top place usually attract more attention than other funds.Investors' behavior may have influence on cash flow of star fund.In the trend of family development,whether star funds would do effect to fund family and their members bringing much cash flow into family,which we called spillover effects? What is the direction of spillover effects,the fund and its family with which characteristics can obtain more cash inflows? Will the spillover effect have an explanatory impact on the fund family and investors? This paper mainly focuses on analyzing the questions above.This paper selects 774 stocks open-end fund in 64 family from 2012 to 2017 as empirical research samples.The result shows that no matter from the whole family perspective or individual fund perspective,China's fund market have significant spillover effect,but the spillover effect is asymmetric.That is to say that the star fund with top performance can bring more cash inflow to its family members and even the whole family,but the fund with poor performance will not bring out cash flow from family.And compared to other members of the star family,funds who have the same fund managers as star funds can gain more cash inflows.Furthermore,fund family performance,family age,family size,number of funds,family stability and fund managers' characteristics will have important impact on fund and family's cash flow.After that,this paper analyzes the impact of spillover effect on fund families and investors.We found that fund families may adopt star strategy to take advantage of spillover effect,which will damage the interests of investors.Finally,based on the theoretical and empirical analysis,this paper puts forward some corresponding suggestions from three aspects: family,investors and regulators.