Superior Performance and Management Fee: Evidence from Open-end Funds in China

The study conducted on China funds' management performance and management fees provides valuable insights into the dynamics of the fund industry in China. Analyzing a sample of 1,742 open-end and actively-managed equity funds over a 5-year period, the research reveals that a significant proportion of these funds charge varying management fees. While higher management fees are associated with certain performance metrics such as realized returns, volatility, maximum drawdown, and Jensen's alpha, they do not lead to superior performance in risk-adjusted metrics. Investor behavior indicates a prioritization of higher returns over fees and risks. The implications suggest a need for enhanced fee transparency, emphasizing risk-adjusted returns, and regulatory oversight. These recommendations aim to align investor expectations, improve investor education, and promote a more efficient and competitive fund management industry in China.