Limited Attention,Morningstar Rating And Fund Investor Behavior

Limited attention is a core concept of behavioral finance,which refers to the fact that fund investors are often unable to timely obtain and fully understand the information in the market due to the differences and limitations of time and energy of individual.Individuals usually only receive fund information that attracts their attention,and make corresponding investment decisions based on the analysis and judgment of such information,so as to cause the occurrence of temporary pricing deviation.Therefore,only the information that can attract the attention of fund investors can have an impact on the fund market.Therefore,to find an appropriate proxy variable to measure the attention of investors can not only reflect the basic operation of the fund market in a comprehensive way,but also comprehensively analyze the influencing factors of fund investors' investment decisions.In measuring the variable of limited attention,traditional methods mostly use indicators such as turnover rate,media coverage and trading volume to measure indirectly.However,with the popularity of the Internet,a new generation of investors has begun to use Internet search engines to obtain the information they need.In China's securities and fund market,which is dominated by small and medium-sized investors,the keyword search index provided by search engines can well reflect the behavior that individual fund investors in China take the initiative to obtain relevant fund information.In the face of a large number of funds in the market,a large number of individual investors without professional investment knowledge are more inclined to refer to the fund rating agencies to make investment choices.Morningstar rating is currently the most important investment research institution in the United States and the authority of international fund rating.It not only objectively and fairly reflects the risk and return of the fund,but also has passed the test of the capital market for decades and become an important reference for fund investors to make investment decisions.In this paper,Baidu index is used to directly measure the attention of fund investors,which is more close to the actual situation of the current society.Morningstar rating with the best rating quality is selected as the variable of fund rating,so as to study the interaction between the behavior of fund investors and limited attention and Morningstar rating.In the empirical study,the relationship between the limited attention of fund investors and their investment behavior is first analyzed,and the results show that the limited attention is positively correlated with the fund subscription and redemption scale,and has no significant influence on the net subscription and redemption behavior.Secondly,the influence of Morningstar rating on the behavior of fund investors is analyzed.The results show that the Morningstar rating of the fund is positively correlated with the fund investors' subscription fund and redemption fund scale.In addition,when fund investors pay attention to the fund with high Morningstar rating,they are more likely to make the investment decision of subscription fund.Finally,the relationship between the rating of Morningstar and the Baidu index,a proxy variable with limited attention,is analyzed,and the conclusion is drawn that the higher the rating of Morningstar fund is,the more attention it gets from investors.In China's fund market,which is dominated by small and medium-sized investors,the empirical study in this paper has certain reference significance for individual investors' investor decisions and fund managers' management,and also gives researchers an innovative research direction.