What Affects a Taiwan Fund Company’s Operating Performance? An Analysis on Market Share

Feng-Huei Chang,Yeong-Jia Goo

doi:10.4236/tel.2017.75087

Abstract

This study aims to explore the factors that affect the operating performance of 37 Taiwan fund companies by examining monthly data from open-end domestic equity funds and balanced funds from January 2001 to April 2013. The market share of domestic equity funds and balanced funds is used as the proxy variable to measure a company’s operating performance. The results show that there is a significant difference in market share between foreign and domestic fund companies. The age of the fund company, the average turnover rate, and the number of people subscribing for dollar-cost-averaging investment plans are found to be positively related to a company’s market share, while the average rates of transaction cost and management fee are negatively related to the market share. We also find that star funds have a significantly positive effect on the market share of a mutual fund company.

Highlights

Mutual fund companies have become one of the fastest-growing industries in Taiwan’s financial service sector over the past 20 years, since the government’s policy of opening the capital market in 1992 and allowing the opening of new securities investment trust enterprises (SITEs)
We find that star funds have a significantly positive effect on the market share of a mutual fund company
On average the market share of domestic fund companies was found to be higher than that of foreign fund companies. This could be due to the fact that the acquisitions made by foreign fund companies in recent years have been of domestic fund companies with smaller average asset sizes and market share

Summary

Introduction

Mutual fund companies have become one of the fastest-growing industries in Taiwan’s financial service sector over the past 20 years, since the government’s policy of opening the capital market in 1992 and allowing the opening of new securities investment trust enterprises (SITEs). Fund companies have undergone multifaceted change within the industry, a bond fund crisis in 2004, global financial crises, product innovation, mergers and acquisitions involving foreign capital, and the expectation of future competition from China. How a fund company develops its own management strategy is becoming more and more important for its future growth. This question motivates us to explore the factors that affect operating performance of Taiwan fund companies

Objectives

Results

Conclusion