Performances of Sharia Mutual Funds in Indonesia: Empirical Evidence from a Developing Economy

Abstract

This study aims to analyze the performances of Sharia mutual funds, especially in the Sharia mutual funds on stocks, money market, fixed income, and mixed funds. To enact such a purpose, a descriptive quantitative approach was used in the investigation of on Sharia mutual funds listed in Indonesia Stock Exchange 2015-2020 following the criteria of Sharia mutual funds of actively operate in Indonesia stock exchange which has great performance seen from Net Asset Value (NAV). The data analysis was carried out using phases of determining the rate of return calculated from NAV, the measurement of total risk with the standard deviation proxy, and the measurement of its performance using Sharpe ratio. The results indicate that fixed return of Sharia mutual fund carries the best performance compared to the stock, money market, and mixed investment funds. It has a higher return per unit risk and maximum probability of investment return above the income with riskfree. These research findings can be a reference for investors, primarily those who follow Sharia rules, in making mutual funds investment related decision in the future. They also can consider the Sharpe ratio to select the type of Sharia mutual funds in Indonesia, as the proper hedge investment.