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Why do bank‐affiliated mutual funds perform better in China?

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  • Haoyue Zhang
  • Dayong Lv
  • Wenfeng Wu

Abstract

Prior literature documents that bank‐affiliated mutual funds underperform unaffiliated funds in developed markets. Using data from the Chinese mutual fund market from 2005 to 2020, we find that Chinese bank‐affiliated funds outperform unaffiliated funds by about 2.63 percent per year. In addition, our results show that bank‐affiliated fund managers have superior active management and better stock‐picking skills, which is preliminarily related to the motivational compensation policies from fund companies and the slight redemption pressure from investors. However, we find no evidence for the potential information advantage of bank‐affiliated funds. Our findings have important implications for fund companies and investors.

Suggested Citation

  • Haoyue Zhang & Dayong Lv & Wenfeng Wu, 2022. "Why do bank‐affiliated mutual funds perform better in China?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(5), pages 4755-4782, December.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:5:p:4755-4782
    DOI: 10.1111/acfi.12998
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