2.2 ANÁLISIS EN EL ECUADOR, 2000-2008
2.2.1 CONTEXTO ECONÓMICO REGIONAL
Future research could conduct tests for other types of funds, such as debt funds, balanced funds, index funds and QFIIs, and compare the managers‟ selective ability among different types of mutual funds. Testing the selective ability, market timing ability and performance persistence of all types of mutual funds could provide an overview of mutual fund industry in China. In addition, which type of mutual funds in China could perform better could be examined by comparing the selective ability among different types of mutual funds. Further, the excess return that reveals mutual fund managers‟ selective ability is 10.786% per year, which is relatively higher than the result from prior literature (e.g. 0.81% per year in the U.S). The potential reason for this high excess return could be information leakage, where mutual fund managers could obtain inside information to earn a high excess return. As a result, future research could investigate more on the market efficiency on Chinese financial market. Moreover, future research could also compare mutual fund managers‟ selective ability between foreign mutual funds (QFIIs) and other domestic mutual funds in China (such as equity funds, debt funds,
88 balance funds, and index funds), which could further investigate whether managers from domestic mutual funds have better selective ability than managers from foreign financial institutions (QFIIs). Further, future research might consider applying a different market index if an overall market index becomes available in the future. Equity mutual funds in China do not currently have a standard/legal required benchmark because of the lack of an official overall market index. As discussed in section 5.4, if an overall market index becomes available in the future, all mutual funds might start to use the overall market index as the benchmark, which can provide a better evaluation for all mutual funds performance.
Future research could investigate whether changes in management structure can impact mutual fund performance persistence in China market. According to Goetzmann and Ibbotson (1994), changes in management structure might impact mutual fund performance persistence. The reason for non-persistence mutual fund performance could be due to either mutual fund managers do not have selective ability or experience changes in management structure in the funds. Since there is no data available for management structure changes in mutual funds this test cannot be conducted for this study.
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