EVALUATING THE PERFORMANCE OF ISLAMIC AND NON-ISLAMIC MUTUAL FUNDS: A COMPARATIVE ANALYSIS

Hafiz Muhammad Mushtaq, Kanwal Iqbal Khan, Adeel Nasir and Naheeda Ali
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Hafiz Muhammad Mushtaq: University of Management & Technology, Pakistan
Kanwal Iqbal Khan: Institute of Business & Management, University of Engineering and Technology, Pakistan
Adeel Nasir: Lahore College for Women University, Lahore, Pakistan
Naheeda Ali: Department of Law, The University of the Punjab, Gujranwala Campus, Gujranwala, Pakistan

Bulletin of Business and Economics (BBE), 2022, vol. 11, issue 1, 184-196

Abstract: Mutual funds are splendidly contributing to the flourishing of the financial market around the world. This role is extremely vital in emerging economies like Pakistan, where prospective investors lack the essential financial knowledge and risk aptitude to put direct resources in risky stocks. Mutual funds are regulated by the Securities and Exchange Commission of Pakistan (SECP) to protect investors and develop the capital market. This research aims to evaluate the risk-return and compare the performance of 140 Islamic and non-Islamic mutual funds for a period of 4 years, from 2017-2020 in Pakistan. The impact of five micro and three macro country factors on their returns was evaluated. Fixed and random effect models were used for analysis. The results expressed that the factors impacting Islamic mutual fund return are management fee, inflation rate, expense ratio, and GDP statistically significant. In contrast, real interest rate, fund age, and fund size are insignificant. Moreover, GDP, real interest rate, total expense ratio, and fund size have statistically significant on non-Islamic mutual fund returns, while management fees, inflation rate, and age of the fund are insignificant. As a result, while making investment decisions, investors must consider both country-level factors and fund-specific features.Random Effect Model

Keywords: Islamic Mutual Fund; Non-Islamic Mutual Fund; Risk; Return; Fixed Effect Model; Random Effect Model (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:11:y:2022:i:1:p:184-196

DOI: 10.61506/

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