Abstract
The aggregate portfolio of Chinese actively managed stock mutual funds exhibits a large and significantly positive alpha. Results from bootstrap simulations indicate that most Chinese active stock mutual fund managers have skill. A substantial amount of their outperformance can be attributed to the fund managers’ stock picking abilities. Using a Chinese insider trading dataset, I show that the large shareholding companies (including stock mutual funds) possess information that generates significant abnormal returns. Furthermore, I find evidence that stock fund managers trade in accordance with insiders. Finally, I find Chinese institutional investors outperform the market. As institutional ownership of the stock market grows, performance erodes among stock mutual funds.
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