A Study on the Performance of Mutual Funds: Evidences from the Fund Management Industry in Taiwan
Date Issued
2015
Date
2015
Author(s)
Wu, No-Chen
Abstract
Due to its popularity, mutual fund management has become a fast growing industry in recent years. Fund managers provide their expertise in terms of market timing and stock selection for investors, thus help to save the investors’ time and efforts in managing their fortune. As a result, this type of financial derivative has become popular among investors. Empirical industrial research from the past focused mostly on the “efficiency” rather than the “human factor” concerning fund management. This thesis, therefore, attempts to examine the important issues in the mutual fund industry through the latter perspective by exploring how performance will be influenced by different management structures and fund managers’ characteristics. Also, the present study attempts to establish a linkage between the individual, team and firm performance. Collecting the data of Taiwan’s fund managers and fund management companies, the research objectives of this study are three-folded. First, using four-factor model and Chow test based on two sub-population regressions, the empirical model explicitly considers possible structural differences between the sole-manager and team-manager fund management. This study then sets Morningstar-awards as an indicator for individual manager’s performance. The Probit model is used to further identify factors influencing the fund manager’s performance. At last, this study not only considers the factors that influence fund management companies’ performance, the notion of star workers is incorporated into the regression model to identify the interaction between individual and firm performance. The empirical results indicate that team managers perform better, supporting the diversification of opinions hypothesis. As for fund manager’s individual performance, it is found that female managers who got promoted, having shorter tenure, higher return, lower-paid, hired by foreign company will have a higher probability to win the Morningstar-award. Furthermore, firms with better performance, in terms of higher average fund returns, are the international companies and those having smaller fund number, longer years of establishment and larger number of investing targets. Last but not least, the firms which have won the Morningstar-awards usually reveal a better performance, indicating that fund managers’ superior performance will improve the firm’s performance. Through the notion of star workers, this thesis establishes the missing linkage between fund managers and fund management companies.
Subjects
mutual fund
fund manager
fund management company
difference between individual and team performance
Morningstar-awards
star performer
SDGs
Type
thesis
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