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Fan, Han (2022) Irrational Behavior of Investors and Its Risk to Their Returns: Evidence from Chinese Mutual Funds. [Dissertation (University of Nottingham only)]

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Abstract

With the development of Chinese economy and maturation of China fund market, actively managed mutual funds are gradually becoming an important investing instrument for both retail and institutional investors. Although on average the funds’ performance is satisfying, irrational behavior is still a risk prevent investors from realizing profit.

From the perspective of fund investors, we find them are influenced by the information from professional institutional, the Jinniu Awards, such credit itself could help funds attract significantly more money despite their returns. Besides, good past-term returns is also not a guarantee for future performance, for we discover that last-year Jinniu Awards winners do not outperform their competitors in the following year.

From the perspective of fund manager, our finding reveals that the Jinniu Awards together with cash inflows from investors amplify their overconfidence, that their transaction fee rise apparently after they are awarded. And such overconfidence hurts their returns resulting in their underperforming their counterpart.

Our research could serve as a reminder for both fund investors and managers that overconfidence and other irrational behavior are still a risk that they may face when making financial decisions which could severely threat their profit.

Item Type:	Dissertation (University of Nottingham only)
Depositing User:	FAN, Han
Date Deposited:	25 Apr 2023 14:21
Last Modified:	25 Apr 2023 14:21
URI:	https://eprints.nottingham.ac.uk/id/eprint/67720

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