Investor Sentiment and Investment Behavior in the Chinese Mutual Fund Market

Jen-Sin Lee, Pi-Hsia Yen and Kam C. Chan

Chinese Economy, 2014, vol. 47, issue 1, 38-52

Abstract: This article studies investor sentiment and its relation to the investment behavior of mutual fund investors in China. Using a panel threshold model, we found that investment behavior varies across investor sentiments, especially in a volatile as opposed to a stable period. The study demonstrates that mutual fund investors (1) prefer to purchase mutual fund units when mutual funds have gains during a volatile period; (2) prefer to redeem mutual funds units when the funds have gains during a stable period; (3) prefer to purchase mutual funds units when the funds have losses during a stable period; and (4) prefer to redeem mutual funds units when the funds have losses during a stable period.

Date: 2014
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