Abstract: The excellent funds managers not only have the micro-ability to stock selecting but also have the macro-ability to market timing.The existing models of funds performance evaluation are the single factor model in which benchmark is the excess return of stock index.In fact,funds managers have selecting right among stocks and bond and cash.This paper builds a conditional two-factor measure model,and proves the efficiency of this model using panel data regression skill.The samples are 54 Chinese close-end funds.The conclusion is that the conditional two-factor measure model not only has higher fitness butt also decreases the minus bias of market timing.In addition,Chinese funds managers have the micro-ability to stock selecting and the macro-ability to market timing.

Key words: stock selecting ability, market timing, conditional two-factor, panel data