European Journal of Business and Management www.iiste.org ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline" &ol.'( No.20( 201) 15' An Empirical Study of Risk-Return Profile of Islamic Mutual Funds: A Case from Pakistan *a+eel Mumta, 1 Mu+ammad sman 2 Saad Bin Nasir 2 1. /epartment of ommere( o3ernment ollege ni3ersit4( aisala6ad( !a7istan 2. /epartment of Business 8dministration( o3ernment ollege ni3ersit4 ( aisala6ad( !a7istan E-mail of t+e orresponding aut+or saad.gora4a:+otmail.o.u7 Abstract ;+e remar7a6le growt+ of t+e Islami mutual funds o3er t+e glo6e +as inreased demand among in3estors to inlude t+ese funds in t+eir portfolio of in3estments. <it+ t+e emergene of Islami Mutual und Muslim in3estors are inreasingl4 s+ifting to Islami Mutual und. Sine 1990s e=uit4 in3estment t+e total wealt+ under t+e management of Islami e=uit4 funds e>luding apital appreiation" +as grown at an annual r ate in e>ess of 15?.;+e growt+ of t+e Islami funds operating in !a7istan is 3er4 rapid for e>ample@ Islami Mutual unds started in 1995 wit+ 8l Mee,an In3estment Management Aimited introduing first Islami Mutual und 8l Mee,an Mutual und" as on Jul4 1$( 1995. ;+e 3alue of t+e total assets for t+e Islami e=uit4 funds +a3e risen from S/ #00 million during t+e 4ear 199' to S/ $.' Billion in ust se3en 4ears period i.e. 200$. Cene( t+is resear+ paper is an attempt to in3estigate ris7 and returns profile of t+ese funds relati3e to t+e respeti3e mar7et Islami and on3entional 6en+mar7s using panel data anal4sis from Jul4 200D to June 2012. onsistent wit+ pre3ious studies onduted to anal4, e t+e performane of Islami funds@ on a3erage t+e results indiate t+a t t+ere is statistiall4 insignifiant differene in return performane of t+e Islami funds relati3e to t+e 6en+mar7s. ;+e result also re3eals t+at t+ere is a superior fund seleti3it4 s7ill 6ut inferior mar7et timing e>pertise among t+e Islami fund managers wit+in t+e period of t+e stud4. %n t+e ontrar4( results signif4 t+at t+e Islami funds +a3e 6een a6le minimi,e t+e ris7s as o mpared to t+e 6en+mar7s and t+eir r eturns performane is ompara6le to t+e mar7et 6en+mar7. Cene( t+e outome of t+is stud4 would 6enefit potential in3estor and mar7et pla4ers towards partiipating in mutual fund industr4( partiularl4 in Mala4sia. 8dditionall4( t+e stud4 will add 7nowledge on Islami mutual funds performane in t+e finane literatures. Keyords:Islami Mutual und( !erformane E3aluation( !anel /ata. !" I#$R%&'C$I%# ;+e term Mutual fund is defined as a t4pe of oint in3estments t+at allows t+e in3estors +a3ing similar in3estment o6eti3es to pool up t+eir resoures to 6e in3ested in a portfolio of seurities or ot+er assets. ;+e managers of t+e fund t+en ma7e in3estments out of t+e pooled funds in t+e portfolio funds@ partiularl4 inlude some assets ategories li7e ommodities( s+areF sto7s( as+( 6onds( deposits( and also properties orresponding to t+e o6eti3es of t+e fund. Mutual funds are an attrati3e soure of in3estment for t+ose w+o desire to ma7e mone4 from finanial mar7ets 6ut dont +a3e suffiient information( e>pertise( or time to manage t+eir own resoures. /ifferent t4pes of mutual funds +a3e different o6eti3es li7e e=uit4 funds( fi>ed inome funds( 6alaned funds and I slami funds et. 8s t+e Muslims are for6idden to in3est in ri6a 6ased fund in3estment( it ma4 inlude seurities +a3ing partial or full element of ri6a. Initiall4 Islami Mutual unds started from t+e Middle East( 6ut wit+ t+e passage of it started to spread its roots in Sout+ 8sian and Sout+ East 8sian Muslim ountries. Now it +as 6eome a worldwide p+enomenon and still growing 64 leaps and 6ounds. <it+ t+e produt di3ersifiation and introdution of more ad3aned and te+nolog4 and s4stems( t+e 6usiness of Islami 6an7s +as onsidera6l4 inreased all o3er t+e world w+i+ resulted in a more ompetiti3e and ad3aned finanial s4stem 6ased on Islami tea+ings. Islami Mutual unds as a new S+aria+ ompliant produt is 6eoming a popular mode of in3estment among Muslim people 6eause Muslim s+olars are unanimous regarding t+e permissi6ilit4 of e=uit4 in3estment. Now it is also attrating non- Muslim in3estors 6eause t+e4 see it as soiall4 responsi6le in3estment. ;+is indiates an important diso3er4 regarding in3estment 6e+a3iour of t+e ross ultural in3estors. ;+e4 not onl4 in3est for ma>imi,ing t+eir wealt+ 6ut also to fulfil t+eir responsi6ilities towards t+e well6eing of t+e soiet4 64 in3esting in e=uit4 6ased 3en tures. ;+e Islami Mutual unds is inreasingl4 6eoming popular mode among t+e rational Muslim ommunit4 6eause of t+eir ris7 and r eturn features. <it+ t+e emergene of Islami Mutual und trend +as 6een o6ser3ed among t+e Muslim in3estors t+at t+e4 are inreasingl4 s+ifting towards Islami Mutual unds. Sine 1990s e=uit4 in3estment and total wealt+ under t+e management of Islami e=uit4 funds e>luding apital appreiation" +as grown at an annual rate more t+an 15?. In !a7istan( Islami Mutual unds were started in 1995 wit+ t+e introdution of 8l Mee,an In3estment Management Aimiteds first Islami Mutual und 8l Mee,an Mutual und" on Jul4 1$( 1995. ;+e total assets for I slami e=uit4 funds +a3e inreased from S/#00 million in 199' to S/$.' 6illion in 200$ 86derre,a7 200#". 8ording to +im( t+ere were 29 Islami e=uit4 funds in 199' and t+is num6er +as inreased to 2$2 funds in Mar+( 2009 6ased on t+e list pro3ided 64 aila7a 8d3isors.
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
http://slidepdf.com/reader/full/an-empirical-study-of-risk-return-profile-of-islamic-mutual-funds-a-case-from 1/14
8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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8/12/2019 An Empirical Study of Risk-Return Profile of Islamic Mutual Funds-A Case From Pakistan
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