The 11th Academic Luncheon of the Digital Technology and Finance

Abstract：

This paper studies the decision by an asset manager to launch an exchange-traded fund (ETF). Unlike the actively-managed open-ended funds (OEFs), whose launching decisions depend heavily on past performance, families' decisions to launch ETFs are driven primarily by investor flows and are subject to objective market conditions. Extreme market concentration in the ETF industry deters new entrance from non-big families. Among families offering both OEFs and ETFs, those demonstrating outstanding active performance tend to stretch on the brand names and launch new ETFs in their outperforming investment objectives. The introduction of a new ETF does not alter family performance on average, but significantly improves the percentage flows into the family and allows the family to charge lower fees. Finally, an ETF launched by a larger family into a liquid objective, and whose inception is backed by sufficient flows into the family is more likely to survive. While ETFs launched into hot objectives are more likely to fail earlier.

Speaker Introduction:

Xinrui Zheng is a lecturer at the Department of Investment, School of Finance, Zhongnan University of Economics and Law. She graduated with a PhD in finance from the Judge School of Business at the University of Cambridge, UK. Her research interests include asset management and financial intermediaries. The research results of her work papers have been cited in interviews with the Financial Times subsidiary BoardIQ and the German Institutional Money magazine.