Risk and Return Evaluation of Malaysian Mutual Fund Market

Abstract

Mutual funds are growing tremendously in Malaysia. Many investors have no time to select individual stocks or bonds in the market due to limited time, money and knowledge. Hence, mutual fund has to show up as a useful and preferred investment tool in the Malaysian market. Ten portfolios were chosen from two prominent mutual fund companies in Malaysia. Performance evaluation and risk measurements were applied to understand the performance of each portfolio. Paired T-test was tested on two portfolios with 45 individual stock in each portfolio. The result was rather intriguing as what was initially expected. There appear to be a difference in terms of decision when applying fundamental measurement using existing concept and measures such as Sharpe and Treynor. To conclude, there is no significant difference in items of risk and return performance in Conventional and Islamic mutual funds. However, further validation can be done with larger sample size or portfolio.