Factors influencing the selection of unit trust funds among Malaysian retail investors

Naail Mohammed Kamil, Muthaloo Subramaniam, Halane Elmi Ali, Mohammed Borhandden Musah and Acheampong Alex

Journal of Islamic Accounting and Business Research, 2018, vol. 9, issue 2, 155-170

Abstract: Purpose - The efficiency of unit trust (UT) funds from quite number of contexts across the globe has been highlighted in previous literature. Yet, there is dearth of research that empirically investigates the factors that influence the selection of UT funds by retailers, particularly in the Malaysian setting. This paper aims to narrow this research gap, whereby perception of past performance, perception of funds’ commitment toShari’ahcompliance, perception of funds’ size and perception of risk tolerance are hypothesized to exert statistically significant influences on the selection of UT funds by retail investors in Malaysia. Design/methodology/approach - The empirical study uses a quantitative research approach whereby survey data have been sampled from 140 retail investors from around Malaysia, using simple random sampling technique. Data analysis has been carried out using multiple regression analysis employing SPSS version 20.0. Findings - The empirical research finds that perceptions of fund size andShari’ahcompliance significantly influence the selection of UT among retail investors in Malaysia. However, there were no enough evidences to support the claims that perceptions of past performance and of risk tolerance influence the selection of UT among Malaysian retail investors. Research limitations/implications - This research is cross-sectional and uses data from Malaysia only. Practical implications - The findings from this research will have enormous implications for policymakers in the accounting and finance sectors of government and private financial institutions and for individual professional Malaysian investors. In particular, investors in Malaysia and potential investors abroad may be enlightened by the findings of this research. Again, Islamic financial institutions may use the findings to boost their performance improvement interventions, thus, having clear evidence of the actual factors that influence retailers in the Malaysian setting. Originality/value - To the best of the authors’ knowledge, this research is among the pioneering research works that empirically explores the factors that influence Malaysian retailers to invest in UT funds. This research is expected to stimulate further research in this novel area.

Keywords: Islamic finance; Perception of fund size; Perception risk tolerance; Retail investors in Malaysia; Shari’ah compliance; Unit trust fund (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:jiabr-11-2015-0057

DOI: 10.1108/JIABR-11-2015-0057

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