Luck Versus Skill: Can Chinese Funds Beat the Market?

In this article, we examine luck versus skill in Chinese mutual fund performance. A bootstrap approach has been applied to 773 open-end equity funds over the period 2002-13. Both the analyses with a returns-based measure and a holdings-based measure suggest the same result: no fund in China can outperform the market. We also find that more growth funds have positive alphas, but the result is not statistically significant. For sub-periods, we find that compared with the period 2008-13 there are fewer unskilled managers than during the period 2002-7. The analyses with different bootstrap rules and different minimum data requirements suggest the same result.