Using a unique dataset from China spanning 2005 to 2023, we investigate how superstitious beliefs influence mutual fund managers’ risk-taking behavior and how this influence evolves over their careers. We find a significant 6.82% reduction in risk-taking during managers’ zodiac years, traditionally considered unlucky in Chinese culture. This effect is particularly pronounced among less experienced managers, those without financial education backgrounds, and those with lower management skills. The impact also intensifies during periods of high market volatility. Our findings challenge the traditional dichotomy between retail and professional investors, showing that even professional fund managers can be influenced by irrational beliefs early in their careers. However, the diminishing effect of superstition with experience and expertise suggests a gradual transition towards more rational decision-making. Our results provide insights into the process by which financial professionals evolve from exhibiting behavior akin to retail investors to becoming the rational actors often assumed in financial theory.

The use of green finance to slow down global warming in support of sustainable development remains widely discussed. This study examines whether investment structure moderates the impact of green finance on the environment in China, one of the top carbon-emitting nations and the second-largest economy in the world. We primarily used the moments-quantile regression approach with fixed-effect models on panel data from 1992Q1 to 2020Q4. First, the results confirmed that green finance and public and private investments worked synergistically to lower CO2 emissions, especially in Central and Western China. However, there was no proof that green finance and foreign direct investment were complementary in reducing CO2 emissions in China, unlike the Central region. Second, green finance marginally lowered CO2 emissions in all provinces, mainly in Eastern and Western China; this reduction was largely dependent on private investment in the Western region’s most polluting areas and foreign direct investment in Eastern and Western China’s least polluting provinces. Third, the beneficial effect of green finance occurred at varying optimal thresholds and investment-related conditions across Chinese regions at different quantiles. Lastly, we showed that in contrast to the variable impacts of urbanization, oil prices, and economic growth across Chinese regions at different quantiles, renewable energy, and trade openness reduced CO2 emissions. In conclusion, the study makes some policy recommendations for China’s sustainable economic development, an important model from which other countries can tailor their investment strategies and environmentally friendly policies.

This paper finds that reported fund returns do not necessarily represent the returns of mutual fund investors, especially over long investment periods. We show that mutual fund’s reported returns are calculated using NAV and represent the mutual fund manager’s skill in extracting value from the capital market. However, the real returns earned by mutual fund investors depend not only on the mutual fund manager’s skill but also on the subscription and redemption activities. Using the inflow and outflow information reported in the mutual funds’ semi-annual reports in China, we are able to calculate mutual fund investors’ real returns. We further derive the adjusted gain coefficient (AGC) to capture the difference between the reported mutual fund returns and the mutual fund investors’ real returns. We find that the AGC is significantly lower than 1, which suggests that the real returns of mutual fund investors are significantly lower than reported mutual fund returns in China. The underperformance of mutual fund investors relative to the mutual fund managers they invest in is very persistent and is stronger in more recent years. A further investigation reveals that this underperformance is largely attributed to investors’ poor timing skills and additional fees incurred as a result of excessive subscription and redemption activities. We also identify skilled mutual fund investors using AGC and find that fund managers can benefit from investors’ timing skills. Skilled mutual fund investors flow in when the mutual fund managers have good investment opportunities and flow out when the mutual fund managers have extra cash. The synchronization of the mutual fund investors’ flow and mutual fund managers’ investment strategies can reduce the need for liquidity management and improve mutual fund performance. Using Chinese mutual funds data, we show that a 1% increase in AGC can increase fund riskadjusted return by 0.2% in the next six months.

The study reveals that the COVID-19 crisis has had a strong but one-off negative impact on the hedge fund industry. It also shows that during the new coronavirus pandemic, the main components of the hedge fund industry achieved only partially their main investment goal, i.e. they as a whole provided a hedge of the investment risk but did not produce higher than the market return in the conditions of a growing capital market. In this situation, due to the relatively stable М&A market, the Event-Driven Risk Arbitrage strategy was undoubtedly most successful, followed by the Emerging Markets, the Global Macro and the Long/Short Equity strategies. The worst performance was reported for the Fixed Income Arbitrage strategy due to the currently overvalued bond markets and to the expectations for higher inflation rates in the countries with developed capital markets.