The Effect of Market Timing Ability and Inflation Rate on Asset Allocation and Performance of Islamic Mutual Funds in Indonesia

Abstract

This study aims to determine and understand the effect of the two research models. The first model is the effect of the independent variables market timing ability and inflation rate on the dependent variable asset allocation. The second model is the effect of independent variables market timing ability, inflation rates, and asset allocation on the performance of Islamic mutual funds in Indonesia (July 2017-June 2022 Period). Mutual fund performance is measured by the Omega Ratio with a minimum expected return threshold of 10%. The sample selection technique uses purposive sampling and uses 5 samples of Islamic funds that have a barometer below 3 or are considered unfavorable. The research method is quantitative by testing t partial using SPSS 28 software. The results of the t test show that partially, market timing ability and inflation rate have no effect on asset allocation and mutual fund performance, while asset allocation has a negative effect on mutual fund performance.