Mutual Fund Investment Strategies and Preferences

Jingjing Yang, Jing Chi and Martin Young

Chinese Economy, 2014, vol. 47, issue 1, 5-37

Abstract: This article classifies Chinese mutual funds based on their past investment behavior, using factor and cluster analyses. The empirical results show that the majority of Chinese mutual funds are quasi-indexers (58.58%) which follow a buy-and-hold investment strategy; next are transient mutual funds (31.27%) and dedicated mutual funds (3.38). The results also show that mutual funds generally hold shares of large firms that offer low market risk, low liquidity, and good operating and stock performance. The preferences of quasi-index funds dominate the results. Transient mutual funds focus on good operating performance and growth opportunities. Dedicated funds invest heavily in small, highly liquid listed firms. All types of mutual funds in China prefer to hold state-controlled listed firms rather than privately controlled ones.

Date: 2014
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