Research On Risk Adjustment Behavior Of Mutual Funds In China

Mutual funds reduce the threshold and risk for individual investors to participate in the stock market,and play an important role in stabilizing the market and promoting healthy competition in the capital market.Due to the lack of effective corporate governance mechanism of mutual funds in China,there are serious principal-agent problems in the fund investment process.Fund managers pursue size growth while investors pursue excess returns.The interests of the them are not identical sometimes.Fund managers with information advantages tend to generate short-term speculation because of their own interests,which will damage the interests of investors.In addition to the immature development of China's capital market,most of the individual investors lack professional and rational investment ability,and are mostly at a disadvantage in fund investment.Studying and analyzing the behavior characteristics of fund managers and establishing market restraint and incentive mechanism can effectively restrain the short-term speculation of fund managers,solve the principal-agent problem and protect the interests of investors.Based on the new perspective of investor behavior characteristics analysis,this paper takes stock-based and partial-equity hybrid funds as samples to explore and analyze the risk adjustment of mutual funds in China,and systematically studies its basic path and mechanism.Taking the fund investors' behavior into consideration,this paper makes up for the neglect of investors' behavioral characteristics and market effects in the traditional research framework when analyzing fund risk adjustment behavior,and effectively solves the problem of inconsistency between traditional research conclusions and reality.This paper finds that there is an obvious asymmetry between fund performance and fund flow.Performance increase can attract a large amount of capital inflow,while the outflow of funds from performance decline is not obvious.This asymmetry results in unequal "reward" and "punishment" for risk adjustment behavior of fund managers,distorts the positive feedback effect of performance incentives on risk adjustment behavior of fund managers,and leads to moral hazard behavior of fund managers.In addition,after considering the investor behavior factors,the risk adjustment behavior of fund managers will show some differences in different stock market cycles.In bull market,investors are keen to pursue performance,and the inflow effect of performance increase is strong.Loser funds have more room for performance increase because of backward performance in the early stage.They improve performance ranking for attracting more capital inflow.Compared with winner funds,loser funds have stronger willingness to adjust risk.In the bear market,investors mainly take risk precautions,and the inflow effect of performance increase is weak.And in bear market,the pressure of performance increase is greater,and the risk adjustment willingness of loser funds is declining.However,in order to maintain its leading position in performance and attract investors' capital inflow,winner funds will rely on the advantage of leading performance in the early stage and take more risks.So,in the bear market,the risk adjustment willingness of winner funds is significantly stronger than that of loser funds.Finally,this paper also summarizes and puts forward the basic path and mechanism of fund risk adjustment behavior under the new perspective,which further enriches the research results in this field,and provides a new theoretical and practical basis for establishing more effective market restraint and incentive mechanism.