Fund Investment Research Articles

The cumulative prospect theory and fund flows in emerging markets

ABSTRACT This study is the first to examine the efficacy of the Cumulative Prospect Theory value of the past return (CPTV) to explain fund flow in emerging markets funds by considering the impact of fund managers’ characteristics and behavioural biases on fund investors’ investment decisions. Besides, this study also investigates the impact of fund investors’ ability to identify fund managers’ skills. The findings suggest that CPTV has a significant and positive association with subsequent fund flow and emerging market funds’ performance. Notably, the study documents a negative relationship between fund flow and fund size and also highlights that newer funds generate greater fund flows. Furthermore, the findings indicate that investors investing in emerging market funds tend to behave differently, allocate money for alpha, and avoid giving distorted income for factor-related returns to fund managers. The results demonstrate that managers’ skill and portfolio concentration decision affects fund flow and CPTV relationships. The findings illustrate that fund managers who concentrate their portfolio and invest in high CPTV stocks tend to generate higher fund flow than their diversified counterparts.

Forecasting and Error Factor Analysis of the CSI 300 Index Based on the ARIMA Model

The CSI 300 stock index futures are futures contracts with the CSI 300 Index as the underlying asset. The CSI 300 Index represents the overall trend of the Chinese stock market, consolidating a representative variety of stocks for analysis. It is generally believed to reflect the highs and lows of the Chinese stock market, with individual stock price anomalies having limited impact on the overall index. Therefore, studying stock price fluctuations through technical means, focusing on the CSI 300 Index as the research subject, is more appropriate. Correspondingly, it also provides guidance for portfolio operations and institutional or fund investments. Specifically, it plays a guiding role in the research of stock index futures based on the CSI 300 Index. Hence, this paper employs the ARIMA model in time series analysis to establish a model for the CSI 300 Index. Utilizing mathematical methods to process the daily CSI 300 data sampled from January 3, 2023, to December 29, 2023, a one-year period, the ARIMA model is developed using the Python programming language based on economic theory and econometric knowledge. By testing, adjusting, and estimating the model, a reasonable economic interpretation of the model is provided to forecast the CSI 300 Index. Through the analysis of the actual results obtained from this model and the reasons for the differences between the actual values of the CSI 300 Index and the model's predicted values, this study aims to offer valuable insights for enterprises and investors in making relevant decisions.

Integrating Personality Traits and Behavioral Theories in Mutual Fund Investments: Unveiling Investor Dynamics

This article explores the interplay between personality traits, particularly the Big Five model, and the Theory of Planned Behavior (TPB) in shaping individual investment decisions in mutual funds. Utilizing the TPB's framework, the study examines attitudes, subjective norms, and perceived control, linking them to investor intentions. Focusing on India's growing mutual fund industry, the article highlights key industry metrics, indicating robust growth in assets under management and retail participation. Comparisons with developed countries underscore India's untapped potential in mutual fund investments. The research delves into the determinants of investment decisions, considering rationality, socioeconomic factors, and the impact of personality traits. Theoretical frameworks and literature synthesis support the proposed behavior intention model. The findings emphasize the vital role of personality, particularly openness to experience, in influencing investment behavior. In conclusion, the study contributes insights for asset management companies in tailoring schemes to align with investor commonalities. Keywords: Investor, personality traits, Theory of Planned Behavior, Mutual Funds investment

Judging a book by its cover: Fund investors’ physical attractiveness stereotypes and investor behavior

This paper documents that fund investors’ behavior is biased by the physical attractiveness stereotypes that they hold about fund managers. In an experimental setting, we find that although there is no information about highly attractive fund managers outperform their peers, respondents still perceive highly attractive managers to possess superior management skills and are willing to allocate more money to their managed funds. We further find that provision of information in contrast to the assumptions associated with physical attractiveness stereotypes diminishes the bias in investor behavior. When less attractive managers have historical returns that are 4% higher than more attractive managers, investors’ preference for attractive faces is overridden. Empirical evidence obtained using fund market data is consistent with our experimental results.

Potential investments of pension funds in long-term care for the elderly: the case of Croatia

Potential investments of pension funds in long-term care for the elderly: the case of Croatia

The proposed mandatory swing pricing regime and the hard close requirement : Practical considerations

In November 2022, the U.S. Securities and Exchange Commission (the ‘Commission’) proposed rule amendments that would require, among other things, open-end mutual funds to implement a mandatory swing pricing regime under certain circumstances (the ‘Proposals’). To ensure that funds receive order information with sufficient time to make a swing pricing determination, the Proposals would require funds to set a hard cut-off time for the receipt of purchase and redemption orders. Currently, the vast majority of investments in open-end mutual funds are made through intermediaries and retirement plans, such that investors who submit orders to intermediaries and retirement plans before the time the fund has established for calculating its net asset value (NAV) generally receive the same day’s NAV, even if the fund receives the order information from the intermediary or retirement plan after NAV is calculated. This is how mutual fund pricing has operated in the US for over 50 years. The Proposals would upend current operations. Under the Proposals, an investor’s order would have to be received by the fund — not a financial intermediary or a retirement plan — before the cut-off time set by the fund for calculating NAV in order to be eligible for the same day’s NAV. If adopted as proposed, the Proposals would require extensive changes to mutual fund pricing systems and infrastructure in the US. In this paper, we acknowledge the arguments against the Proposals by an overwhelming majority of industry commenters and, without undercutting those arguments, we explore practical, regulatory and compliance considerations for funds seeking to better understand how the Proposals might affect their day-to-day operations.

Cognitive Biases Impact on Investor’s Investment Decision of Retail Mutual Fund Investor

The purpose of this research is to study the effect of Cognitive bias on Investor’s investment decision of Retail Mutual Fund Investor.
 Methodology Adopted:Structured questionnaire was distributed to 1012 Indian mutual fund investors of four states considered financial hubs of India (Delhi/NCR, Mumbai, Bangalore, and Kolkata). Multiple regressions were used to test the model. Validity of instrument was established through CFA.
 Findings: Cognitive Bias (Overconfidence, over-reaction, Herd Effect and Regret Aversion) significant with investor’s investment decision making.
 Research Implications:Results are significant on Indian investors but with different geographic results might different. 
 Originality/ Value: Academic research is still needed to understand the impact of mutual fund investors' cognitive biases on their investment decisions, Biases studied on Equity investors in south India, due to inconsistency in literature the work found to be original.

The Past, Present, and Future of Gulf Sovereign Wealth Fund Investments in China

AbstractThis article explores sovereign wealth fund investments by Gulf Cooperation Council member states in China's equity market. Using data from Chinese stock exchanges, we analyze patterns of shareholding over two decades, across different sectors and among distinct funds, and compare them to their non‐Gulf counterparts. We reveal a gradual upward trajectory in both the scale and diversity of investments by Gulf funds, indicating growing engagement with the Chinese equity market. We anticipate a continuation of current trends, albeit with larger volumes and potential expansions into technological and emerging sectors that align with Gulf interests. We project that the deepening financial linkages between China and the Gulf could give rise to a mini petro‐yuan system operating under the dominance of the American dollar. This does not presage a transformation in China‐Gulf relations but should be understood within the increasing complexity of their broader economic ties. The article is part of a special issue examining the responses of Gulf countries to rising Sino‐American competition, edited by Andrea Ghiselli, Anoushiravan Ehteshami, and Enrico Fardella.

Methodological provision of analysis of the efficiency of investment activities of enterprises

The paper is devoted to the disclosure of the main provisions of methodological support for the analysis of the investment activity of enterprises and practical recommendations on the use of methods for evaluating the effectiveness of the implementation of investment projects for decision-making. Making investment decisions is based on the use of various formalized and informal methods and models, taking into account the following factors: changes in the value of money over time; alternative value of resources; cash flows generated by the project; uncertainty and risk; inflation, price changes and currency exchange rate fluctuations; investment goals and investor psychology; possible changes in project parameters; synergies between investment projects of the enterprise. When forming the list of monitoring indicators, those aspects of the business entity's investment activity that are most important for owners, investors and management organizers were highlighted. It is proposed to form a system of performance indicators of the enterprise's investment activity in accordance with the sphere of investment: production, marketing, technology, organization. The principles of investment activity analysis and recommendations on the procedures for analyzing the effectiveness of project implementation have been formed, the choice of which depends on the management goals aimed at achieving a stable cash flow and ensuring the financial stability of the enterprise. The essential characteristics, advantages and disadvantages of the existing approaches to evaluating the effectiveness of investment projects are revealed. A system of indicators and criteria for the analysis of the effectiveness of investment activities of indicators characterizing the effectiveness of investments depending on the sphere of investment of funds: production, marketing, technology, organization are proposed. Recommendations for choosing a specific method for evaluating the effectiveness of investment projects in the context of achieving the priority goal - maximizing project profitability, risk acceptability and investors' interests are substantiated.

Study on the Mental Care of Rural Empty Nest Elderly under New Urbanization

Today, with the continuous acceleration of new urbanization, the number of rural empty nests is also increasing year by year. The report of the 19th National Congress of the Communist Party of China proposes to improve the basic old-age insurance for urban and rural residents, improve the elderly care system, and ensure that the elderly have a place to take care of. Under the development of this era, it is necessary to protect rural empty nest elderly this group, but we not only pay attention to their material guarantee, but also notice their spiritual care. For the spiritual care of rural empty nest elderly, we should analyse their spiritual demands monolithically, and build a three-dimensional comfort system that is "government-led, fund investment, social worker intervention, self-regulation, and neighbourhood assistance" to solve their spiritual demands.

Advancement and the existing landscape of forensic medicine in Africa: A comparison with developed countries.

This article explores the development and challenges of forensic medicine in Africa, comparing it to developed countries. It addresses limited resources, funding, and a shortage of trained professionals. The growth of forensic investigation capabilities and the challenges of funding and technology access are discussed. Training and education have improved, but disparities remain. Partnerships with developed countries and international organizations are crucial to bridge the gap. A comprehensive legal framework is important, but disparities exist among African countries. Harmonizing forensic laws would enhance cooperation. The role of forensic medicine in the criminal justice system is examined, emphasizing the need to build trust in forensic evidence. International collaboration and capacity building are key to advancing forensic medicine in Africa. Investments in infrastructure, funding, training, and legal frameworks are required. By leveraging partnerships, Africa can develop its forensic medicine capabilities for a fair and effective criminal justice system.

R&D investments in emerging market firms: the role of institutional investors and board interlocks

Despite the increase in institutional investor shareholdings in emerging market firms, their impact on R&D investments has received scant attention in the literature. By integrating agency and resource dependence perspectives, we examine the role of different types of institutional investors and their interactions with board interlocks in shaping their preference for R&D investment in their portfolio firms. We test our hypotheses on a sample of 2,478 Indian firm‐year observations from 2005 to 2019, using various estimation techniques. Our results indicate that different categories of institutional investors have distinct preferences for R&D investment. Specifically, we find that ownership by both foreign institutional investors and mutual fund investors negatively impacts R&D investments in firms. While board interlocks positively moderate the impact of institutional investors such as banks and financial institutions and foreign institutional investors on R&D investments in firms, this moderation is negative in the case of mutual fund investors and R&D investments in firms. We contribute to the understanding of the determinants of R&D investments in emerging market firms, with a specific focus on institutional investor ownership and add to the nascent literature on the interaction between two forms of governance, i.e., ownership and board characteristics, in shaping this firm strategy.

Algorithm-Based Low-Frequency Trading Using a Stochastic Oscillator and William%R: A Case Study on the U.S. and Korean Indices

Using stochastics in stock market analysis is widely accepted for index estimation and ultra-high-frequency trading. However, previous studies linking index estimation to actual trading without applying low-frequency trading are limited. This study applied William%R to the existing research and used fixed parameters to remove noise from stochastics. We propose contributing to stock market stakeholders by finding an easy-to-apply algorithmic trading methodology for individual and pension fund investors. The algorithm constructed two oscillators with fixed parameters to identify when to enter and exit the index and achieved good results against the benchmark. We tested two ETFs, SPY (S&P 500) and EWY (MSCI Korea), from 2010 to 2022. Over the 12-year study period, our model showed it can outperform the benchmark index, having a high hit ratio of over 80%, a maximum drawdown in the low single digits, and a trading frequency of 1.5 trades per year. The results of our empirical research show that this methodology simplifies the process for investors to effectively implement market timing strategies in their investment decisions.

Do US Active Mutual Funds Make Good of Their ESG Promises? Evidence from Portfolio Holdings

We investigate the occurrence of greenwashing in the US mutual fund industry. Using panel regression methods, we test whether there exist differences in the portfolio investment behaviors of active equity funds that are self-declared to be driven by ESG motives when compared to all other funds. In particular, we focus on two aspects of funds’ portfolio allocation decisions, i.e., the actual implied average ESG ratings of the stocks a mutual fund invests in and the portfolio share invested in sin stocks. We do not find strong evidence that ESG and non-ESG funds make identical investment choices and hence reject the hypothesis of widespread greenwashing. ESG funds, on average, invest more in companies with higher ESG ratings and avoid sin stocks more than non-ESG funds. Nonetheless, we obtain evidence that some degree of greenwashing may still be occurring. However, over time, the differences between ESG and non-ESG funds in these behaviors seem have declined, suggesting a potential reduction in greenwashing practices.

The Influence of Funding Decisions, Investment, and Liquidity Decisions on the Profitability

Companies must always strive to maximize their income in getting results and levels of profit. Companies can maximize their advantages if financial management knows the factors influencing profitability. Profit plays a massive role in determining whether a company will experience difficulty or can continue to survive in the industrial world. This study aimed to determine the influence of Debt to Equity Ratio (DER), Total Asset Growth (TAG), and Current Ratio (CR) on Return on Assets (ROA) in food and beverages sub-sector companies listed on the Indonesia Stock Exchange for the period 2017- 2022. This research method uses quantitative methods. A total of 16 companies were included in the sample study. These samples were taken using a purposive sampling method. Hypothesis testing in this research uses panel data analysis with the E-views 12 program. This research shows that DER, TAG, and CR. influence ROA, and partially, DER harms ROA, but TAG and CR. partially do not influence ROA.

Understanding Mutual Fund Investors’ Behaviour Using an Extended Model of Goal-directed Behaviour

The study explores and understands the behavioural process followed by individual investors who choose or do not choose to invest in mutual funds (MFs) employing the extended model of goal-directed behaviour (MGB). The study design comprises building and testing a theoretically integrated MGB in the context of MFs investing decisions by incorporating a moderating variable, Regret Averse Bias in MGB. Partial least squares structural equation modelling (PLS-SEM) was utilized for the present study. The study’s outcomes revealed that the attitude of investors positively affected their desire to invest in MFs. The findings about emotions indicated the regulatory-focused approach of investors. They revealed the positive influence of negative emotions and no impact of positive emotions on an individual’s desire to invest in MFs. This confirmed the positive influence of financial self-efficacy (FSE) on the desire to invest and actual behaviour. Finally, the study established the moderating effect of regret aversion bias of investors on the association between the desire to invest and behavioural intention (BI). The study addresses the need to probe the relationship between anticipated emotions (AEs), regulatory focuses and behaviour strategies, as pointed out in earlier related literature.

Return on investment from educational research grant funding: deliverables and measurement

This paper investigates the return on investment (ROI) paradigm from fundamental educational research grant funding perspectives. The researchers conducted a wide-ranging literature search regarding the educational research grant funding ROI from public policy and economics viewpoints. The preferred reporting items for systematic reviews and meta-analyses (PRISMA) were utilized to identify and analyze research articles and original reports related to ROI from educational research grant funding. The research data were screened through a literature review based on the inclusion criteria, namely study focusing on return on investment of educational research funding and study published between 2001 and 2021 (as of December 2022). This study found evidence that ROI calculation from fundamental educational research grants is not straightforward and varies. Besides, most available research focuses on research impact rather than economic and intrinsic research value. Based on the compiled literature on research-related performance attributes, this study identified three distinct deliverables of educational research funding: tangible output, intangible output, and research outcome. The present research proposes more robust and reliable methods for measuring the ROI of fundamental educational research impact, potentially generating a much-inform decision-making and resource allocation in educational research grant funding.

A Correlation Analysis of Knowledge, Experience, Religious Belief, and Behavior of Malaysian EPF Investors Towards Investing in Islamic and Conventional Unit Trusts

The objective of the study is to examine the relationship between knowledge, religiosity and experience, and the behavior of employee provident fund (EPF) investors investing in Islamic and conventional unit trusts. The variables are extracted from the literature to achieve the objective. Additionally, 125 valid responses were composed through surveys of Malaysian government and private employees. The Statistical Package for Social Sciences has been applied to analyze the collected data, using correlation analysis techniques. This research found that knowledge about Islamic unit trusts and religious beliefs have a positive significant relationship with the EPF investors’ behavior of investing in Islamic unit trusts. Moreover, the experience of investing in Islamic and conventional unit trusts is also positively and significantly associated with the EPF investors’ behavior of investing in Islamic and conventional unit trusts, respectively. As research in this area is insufficient, this study will play a vital role for the unit trust industry in exploiting the financial strategies that are highly and positively observed by Malaysian EPF investors.

Analisis Peluang Investasi Dana Haji Pada Industri Halal Di Indonesia

Hajj Financial Investment is an activity that involves placing the financial resources of the Hajj Financial Management Agency in business activities that are not contrary to sharia principles and applicable laws and regulations. The purpose of this activity is to obtain returns after thinking about in-depth research on the risks and benefits that can be obtained from these business activities. The purpose of this study is to analyze opportunities for the use of Hajj funds in the halal industry sector. To collect data, this research uses a qualitative descriptive method consisting of conducting interviews and documenting the results. The results showed that investment of Hajj funds in the Halal industry has a lot of potential and opportunities are very large because the halal industry has many development opportunities. This is supported by Indonesia's Muslim population of 237.55 million. The halal industry is one of the best alternative investment instruments because it is productive and sustainable. Investment strategies in the halal industry can be carried out by collaborating with halal industry executors in Indonesia in the Halal Food, Halal Travel and Muslim Fashion sectors, which are leading sectors of the global industry. BPKH also faces various risks that cannot be separated from the management of Hajj finances, therefore risk management is one of the most fundamental aspects that need to be considered in the investment of Hajj funds by BPKH.

The Mediating Role of Customer Satisfaction in the Effect of Perceived Enjoyment on Customer Trust in Online Investment Application

This study aims to analyze the influence of perceived enjoyment on trust in online mutual fund investors through customer satisfaction with the Bibit mutual fund application. Data were collected through questionnaires distributed to users of the Bibit Mutual Fund application. The research population consisted of all Bibit application users in the area of Malang City, East Java – Indonesia, and a sample of 120 users was selected using purposive sampling. The research instrument employed a questionnaire with 24 statements. Data were analyzed using Structural Equation Modeling - Partial Least Squares (SEM-PLS). The findings reveal a significant influence of perceived enjoyment on customer trust mediated by customer satisfaction with the Bibit mutual fund application. In conclusion, customer satisfaction serves as a mediating variable between perceived enjoyment and user trust in the Bibit Mutual Fund application. This research contributes to understanding the dynamics of user experience and satisfaction in the context of online investment platforms, emphasizing the pivotal role of satisfaction in fostering customer trust.