{"title":"Does cross-border investment improve mutual fund performance? Evidence from China","authors":"Han Han, Zhibin Wang, Xueqing Zhao","doi":"10.1016/j.chieco.2024.102186","DOIUrl":null,"url":null,"abstract":"<div><p>In this paper, we analyze how Chinese mutual funds' performance is affected by cross-border investments, following the relaxation of investment restrictions on Hong Kong stocks. We find that mutual funds underperform when they increase their H-share holdings, suggesting that easing investment restrictions doesn't improve fund performance. Information asymmetry and the limited ability of fund managers to access H-share information are key factors behind poor performance. And fund managers employ such “bad” strategy to cater to investor preferences. Furthermore, fund managers do not recognize their limitations in investing H-share. We hope our findings give insights into the investment behavior of funds and enhance the development of the Chinese asset management industry.</p></div>","PeriodicalId":48285,"journal":{"name":"中国经济评论","volume":null,"pages":null},"PeriodicalIF":5.2000,"publicationDate":"2024-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"中国经济评论","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1043951X24000750","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
In this paper, we analyze how Chinese mutual funds' performance is affected by cross-border investments, following the relaxation of investment restrictions on Hong Kong stocks. We find that mutual funds underperform when they increase their H-share holdings, suggesting that easing investment restrictions doesn't improve fund performance. Information asymmetry and the limited ability of fund managers to access H-share information are key factors behind poor performance. And fund managers employ such “bad” strategy to cater to investor preferences. Furthermore, fund managers do not recognize their limitations in investing H-share. We hope our findings give insights into the investment behavior of funds and enhance the development of the Chinese asset management industry.
本文分析了港股投资限制放宽后，跨境投资对中国共同基金业绩的影响。我们发现，共同基金在增持 H 股时表现不佳，这表明放宽投资限制并不能提高基金业绩。信息不对称和基金经理获取 H 股信息的能力有限是业绩不佳的关键因素。基金经理采用这种 "糟糕 "的策略是为了迎合投资者的偏好。此外，基金经理并没有认识到他们在投资 H 股方面的局限性。我们希望我们的研究结果能对基金的投资行为有所启示，并促进中国资产管理行业的发展。
期刊介绍：
The China Economic Review publishes original works of scholarship which add to the knowledge of the economy of China and to economies as a discipline. We seek, in particular, papers dealing with policy, performance and institutional change. Empirical papers normally use a formal model, a data set, and standard statistical techniques. Submissions are subjected to double-blind peer review.
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