Abstract
Contradictory results are documented in the literature regarding which type of mutual fund has superior performance; an Islamic or conventional mutual fund. Due to the relative short history of the Islamic mutual funds' industry, prior literature has inevitably relied on a small sample size with a short sample period. With the longest applicable sample period, this study represents one of the most recent attempts to address this conflicting evidence. We find there is no clear cut over performance by Islamic mutual funds against their conventional peers across the three financial crises in our sample period, with the exception of the most recent global financial crisis, where Islamic mutual funds generally outperformed their conventional counterparts. We further find that Islamic funds significantly outperformed conventional funds in the riskiest asset class, equity, one year before and during the global financial crisis. We further reveal that the modified value at risk for Islamic mutual funds was significantly lower than their conventional peers during the global financial crisis. This seems to indicate that Islamic mutual funds have better risk management compared to conventional peers.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.