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The Effect of Fund Uniqueness on Fund Flow Sensitivity: An Empirical Study of Chinese Public Mutual Funds

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  • Qiaobo Zhang

Abstract

With the quick development of mutual funds in China, problem of fund homogeneity becomes more and more non-negligible. This paper constructs a uniqueness index to measure the uniqueness of funds in China by applying cluster analysis method and studies the effect of fund uniqueness on fund flow sensitivity with panel regressions. Using the sample of Chinese publicly-traded equity funds over the years at the quarterly frequency, the empirical result shows that fund uniqueness exert a significant impact on fund flows. That is, fund flows respond less sensitively to the past performance of unique funds than non-unique funds, indicating that more unique funds tend to exhibit a more stable pattern of fund flows. Based on these findings and relevant theories, this paper puts forward some suggestions on promoting the differentiation of fund products in China and thus contributes to the overall health of Chinese mutual fund market.

Suggested Citation

  • Qiaobo Zhang, 2016. "The Effect of Fund Uniqueness on Fund Flow Sensitivity: An Empirical Study of Chinese Public Mutual Funds," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(10), pages 14-22, October.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:10:p:14-22
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    More about this item

    Keywords

    fund homogeneity; fund uniqueness; fund flows; Chinese mutual fund market;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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