The study of the rate of returns' difference for local funds' dollar-cost averaging three times per month

Abstract

Under the promotion and development of dollar-cost averaging method by every fund company, its advantage of dispersing investment time, reducing investment risk, and not necessary to pay attention to the fluctuation of the fund's net asset value, all of these make this method become the trend. But many investors would always ask, which debit day should I choose would be better? Therefore, whether the debit day of offering the fund would influence the rate of returns or not is exactly the subject matter that this study is going to discuss. This study mainly discusses the rate of returns for local funds' dollar-cost averaging three times per month. Therefore, the study scope mainly includes the local funds that are announced by Infowinner Database from June of 2002 to May of 2007, the fund type is the open-ended equity fund, deducting the funds with less than five years of trade days, and there are 182 funds in total. This study divides the dollar-cost averaging model into four types, which includes three times a month (Day 1, 11, 21), three times a month (Day 6, 16,26), three times a month randomly, each month randomly (once for the first ten-day period, the middle ten days, and the last third part of a month respectively); and the time periods include one year, three years, and five years, with all these data to carry out the heavy and complicated calculation with the assistance of EXCEL 2003 VBA; after calculating the rate of returns of each fund using the formula of rate of returns of this study, and then the rate of returns' change would be analyzed using ANOVA. The result of this study found that different debit days of offering the fund, with one year, three years, and five years as the time periods, their rate of returns did not have significant difference; but using three months as the time period, its rate of returns had significant difference. The result of this study will be contributive to the investers who intend to invest the dollar-cost averaging fund with three offerings a month, so as to serve as one of the index for reference while investing.