The Influence of Endowment Effect on the Investment Decisions in Hybrid Funds

Fund purchasing has become a hot field and topic in the financial industry in recent years. Investors realize the preservation and appreciation of assets by trading fund shares. As an important member of fund products, hybrid fund has been favored by many investors by virtue of its strong liquidity. However, current studies rarely involve the result that investors’ decisions are affected by endowment effect when facing large varieties funds. Therefore, this paper starts from the considerations of investors when purchasing hybrid funds taking into account the influence of endowment effect on purchase conditions and fund performance as independent variables. Due to the endowment effect, the influence of investors’ decision to buy mixed funds is studied. This paper bases on the data obtained from previous studies and combined with theoretical analysis then come to a conclusion. Due to the endowment effect, investors are more inclined to buy star funds and retain funds with good performance, even if their status quo is not in an excellent situation. This paper studies the irrational decisions investors make when buying funds, and the impact of these decisions on investment behavior. At the same time, this paper also explains the causes of “irrational” decisions, so that investors can properly use analytical thinking to adjust and avoid irrational decisions in the future investment, so as to obtain higher investment returns and fund returns.