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Mutual fund investing in the Chinese A-share market

In: Handbook of Banking and Finance in Emerging Markets

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  • Yeguang Chi
  • Xiao Qiao

Abstract

This chapter investigates whether stock mutual funds in the Chinese A-share market provide economic value for investors. Stock mutual funds in China experienced a steady growth from 2006 to 2019 - the number of funds multiplied by 17-fold. These funds outperform the CSI300 Index on average, and fund returns show economically large differences in the cross-section. Fund performance exhibits persistence: the top-performing funds in a given month are also likely to be the top funds in the following month. Portfolios formed using the top-performing funds improve the risk-return tradeoff compared to investing in the aggregate market, without increased volatility or tail risk. Our results indicate stock mutual funds provide attractive investment opportunities in the A-share market.

Suggested Citation

  • Yeguang Chi & Xiao Qiao, 2022. "Mutual fund investing in the Chinese A-share market," Chapters, in: Duc K. Nguyen (ed.), Handbook of Banking and Finance in Emerging Markets, chapter 2, pages 32-50, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20452_2
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    Keywords

    Development Studies; Economics and Finance;

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