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An Investigation of the Return Risk and Liquidity Measure for Chinese Open-Ended Funds

An Investigation of the Return Risk and Liquidity Measure for Chinese Open-Ended Funds
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Author(s): Jingqi Zhang (International Business School, Xi'an Jiaotong-Liverpool University, Suzhou, China)
Copyright: 2020
Pages: 21
Source title: Foreign Direct Investments: Concepts, Methodologies, Tools, and Applications
Source Author(s)/Editor(s): Information Resources Management Association (USA)
DOI: 10.4018/978-1-7998-2448-0.ch047

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Abstract

So far, the fund industry has become one of the four backbones of the Chinese financial system, together with the banking industry, the security industry and the insurance industry. In addition, open-ended fund shares are the mainstream of the fund industry, and the product characteristics and operational characteristics of open-ended funds will lead to an unavoidable risk of return with liquidity measure. Therefore, based on the theories of financial investment, this research profile the risk return and liquidity characteristics of three different open-ended funds in China, which are helpful to making rational investments. This article selects three different kinds of funds with the relevant data from 2012to 2017 from the Huaxia Fund Management Co. Ltd., for each fund, the authors report the beta, Sharp Ratio, Information ratio and illiquidity. These risk-return features are discussed in the context of the different asset classes that each fund has invested, thus eventually obtaining a fund which has smaller relative liquidity risk and higher return after comparing. Hence, the investor can make the rational investment from the analysis of empirical results.

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