Analysis on Factors Affecting Performance of Indexing Investment

Abstract

This article analyzes the current status of indexing investment performance in China and the characteristics of fund managers and fund management companies. It also theoretically analyzes the influence of these factors on indexing investment performance in terms of fund governance structure, characteristics of fund managers and fund companies, stock selection ability and timing ability. Next, it uses multiple regression analysis from three dimensions mentioned above to verify the influencing factors on investment performance. The results show that in terms of passive investment, fund tracking error is significantly negatively correlated with institutional holdings and fund managers’ stock selection ability, and significantly positively correlated with fund managers’ timing ability. Female fund managers’ tracking errors are smaller. Institutional investors play a positive role in promoting the performance of active investment. The fund manager’s stock selection ability can effectively reduce the fund’s sensitivity to target index fluctuations, and the fund manager’s timing ability can significantly improve the performance of fund allocation. Funds allocated by female fund managers will be less sensitive to target index fluctuations.

Keywords: indexing investment, performance, fund management, fund managers

DOI: 10.7176/RJFA/12-22-01

Publication date: November 30th 2021