In light of the tournament theory， this paper studies the imitation behavior among Chinese s mutual funds． In particular， the peer effect as well as its causes and consequences among open-ended funds in the allocation strategies on bubble assets are analyzed． Based on the quarterly portfolio data of open-ended funds between 2005 and 2015， the fund network matrix and equity ownership similarity matrix are constructed． A spatial econometric method is then applied and the resulting empirical evidence shows that there are significant peer effects， i． e． ， the funds take imitation strategy in portfolio allocation on bubble assets． This yardstick competition among fund managers has brought significant net in flows to funds and expanded the size of its assets under management， but does not yield significant abnormal returns to their investors． Our analysis illustrates that fund managers potentially take advantage of the limited rationality of investors to expand the scale of their assets in order to enhance their management revenue． Our paper can help understand the formation of the stock market bubble in China， provide a new perspective on how to effectively regulate the behavior of institutional investors， and reveal new insights for the protection of investors interests．