Environmental conditions, fund characteristics, and Islamic orientation: An analysis of mutual fund performance for the MENA region

Abstract

Islamic funds are increasingly seen as an alternative to conventional funds, in part due to the growing prominence of Islamic finance. In contrast to most previous literature, this paper focuses on the countries of the Middle East and North African region (MENA), and compares the performance of Islamic and conventional funds during crisis and recovery periods. Results show that the relative performance of Islamic and conventional funds seem to be conditioned by several factors such as the (geographical) context in which the investment is made. Considering the entire MENA region, Islamic funds perform, on average, slightly worse than conventional funds. However, if the analysis is restricted to Gulf Cooperation Council (GCC) countries, the result opposite is found. In addition, the performance gap between the two types of funds either widens or shrinks when considering recovery or crisis times, providing evidence that Islamic funds are more stable in times of distress.

Does the choice of stock selection criteria affect the performance of Sharīʿah-compliant equity portfolios?

“…In terms of the difference in performance, evidence is provided either from the mutual funds' industry or broad market indices. For mutual funds comparison; see, for example, as follows: Hoepner et al (2011), Ashraf (2013, Nainggolan et al (2015), El-Masry et al (2016), Makni et al (2016) and Hammamia and Oueslati (2017). For comparison of Sharīʿahcompliant indices with conventional indices; see, for example, as follows: Hussain and Omran (2005), Alam and Rajjaque (2010), Walkshausl and Lobe (2012) and Clarke (2015).…”

The effect of macroeconomics variables to Net Asset Value (NAV) growth of sharia mutual funds in Indonesia

“…Moreover, macroeconomics also represents the return dynamics that influence the investors to invest their money in Islamic mutual funds. Therefore, understanding relationships between macroeconomics variables and NAV of Islamic mutual funds is important (El-Masry et al, 2016;Mansor & Bhatti, 2011;Siswantoro, 2012). With the current macroeconomic situation in Indonesia, the purpose of this study is to analyze the macroeconomic factors that influence the growth of Sharia mutual fund NAVs in Indonesia in the 2015-2019 period, analyze the NAV response to macroeconomic variable shocks, and analyze the contribution of macroeconomic variable shocks to explain the growth of NAV.…”

“…With the current macroeconomic situation in Indonesia, the purpose of this study is to analyze the macroeconomic factors that influence the growth of Sharia mutual fund NAVs in Indonesia in the 2015-2019 period, analyze the NAV response to macroeconomic variable shocks, and analyze the contribution of macroeconomic variable shocks to explain the growth of NAV. Prior study shows the importance of impact evaluation of macroeconomics effects to Islamic mutual funds to increase the growth of Islamic investment (Dewandaru et al, 2017;El-Masry et al, 2016;Mansor & Bhatti, 2011). We also elaborate the analysis with a relevant macroeconomics theory such as the effects of Fisher equation (Mankiw, 2010) and national income accounts identity theory related to GDP dynamics (Mankiw, 2006).…”

Religion as a Macro Social Force Affecting Business: Concepts, Questions, and Future Research

“…Similarly, faith-based mutual funds incorporate ethical values in selecting securities, eliminating firms that violate the beliefs of a specified religion or religious denomination. Investors find meaning by way of investing their money where their faith is: making ethically conscious mutual funds one of the fastest developing subcategories of socially accountable financing (El-Masry, de Mingo-López, Matallín-Sáez, & Tortosa-Ausina, 2016; Gellman, 2013). Thus, religiosity influences organizations by forming the framework in which they develop or recommend new corporate strategic decisions.…”