Are There Hot Hands Among Mutual Fund Houses in Hong Kong?

The article examines the short-term persistence in the performance of the mutual fund industry in Hong Kong, China. The authors focus on the performance of fund houses instead of on individual equity funds. The authors use average monthly returns of all equity funds from mutual fund houses to investigate whether there exists a hot hand phenomenon among the fund houses in Hong Kong. As one of the major financial centers in Asia, billions of dollars are being invested in financial securities in Hong Kong and many international investment bankers are striving for success in this competitive market. The substantial amount of assets invested in different mutual funds sold in Hong Kong is managed by about 400 investment management professionals. All the mutual funds in Hong Kong are either front or back end loaded. Historically the total expenses including advisory and non-advisory fees and other administrative expenses range from five percent to as high as eight percent.