Performance evaluation of Chinese Stock Open-end funds based on their unobserved actions

To measure the unobserved actions of mutual funds, this essay adopts a new variable called the return gap. In this way, we examine the influence of funds' unobserved actions on fund holders. Moreover, based on the unobserved actions, we further modify the Fama-French model and analyze the unobserved actions' determinants, persistence and performance evaluation, through the panel data of 98 Chinese Stock Open-end Funds. Lastly, this essay ends with the conclusions that unobserved actions can reflect decisive fund properties such as interim transaction costs and fund risks, that the actions can better evaluate the fund performance, and that the evaluation of unobserved actions can help fund holders, with higher accuracy, to choose from different funds.