The Impact Of Economic Policy Uncertainty On The Investment Style Of China’s Open-end Funds

Investment style drift is a common phenomenon in China’s fund market,and very often the actual investment style of a fund is not the same as its initial claims.Against the backdrop of the new economic normal,the rise in economic policy uncertainty has become an important factor influencing changes in fund investment styles.Open-end funds are important institutional investors in China’s capital market,and it is necessary to study their investment style and market performance in the context of policy uncertainty.This paper focuses on the impact of economic policy uncertainty on the investment style of China’s openend funds.Based on existing literature studies,this paper firstly selects 153 actively maged equity open-end funds in China as the research object and investigates the relationship between policy uncertainty and fund investment style using a fixed-effects model and finds that:(1)Fund investment style drift has a significant positive correlation with economic policy uncertainty.(2)Ceteris paribus,smaller funds are more likely to experience investment style drift when policy uncertainty increases than larger funds.Secondly,a M-logit model was used to investigate the direction of fund investment style drift,and it was found that when economic policy uncertainty rises,fund investment style tends to drift from the more conservative,stable benefit-seeking value style to the high-risk,high-return growth style.From a theoretical research perspective,this paper adds to the existing literature by examining policy uncertainty as an influencing factor in fund investment style drift.From a practical perspective,this paper provides a new perspective and useful guidance for investors’ fund selection,and may also provide reference suggestions for government departments to formulate economic policies,thereby reducing the phenomenon that the actual investment style of open-end funds does not match the declared style and establishing a favourable market investment climate and investment environment.