THE PERFORMANCE AND SIGNIFICANCE OF ISLAMIC REITs IN A MIXED-ASSET PORTFOLIO

Rozman, Ahmad Tajjudin; Azmi, Nurul Afiqah; Ali, Hishamuddin Mohd; Razali, Muhammad Najib

doi:10.11113/jt.v77.6850

Cited by 7 publications

(7 citation statements)

References 5 publications

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“…They also found that Islamic REITs provide a better risk-adjusted option for a portfolio than all other asset classes. Similarly, Rozman et al (2015) find that Islamic REITs have low correlation with shares and bonds. They suggest that Islamic REITs could potentially offer diversification enhancement to the portfolios of investors in these two assets classes.…”

Section: Islamic Real Estate Investment Trusts In Malaysiamentioning

confidence: 88%

Conventional REITs, Islamic REITs and macroeconomic variables in Malaysia: a review

Sukor

Sujak

Noordin

2020

IJIF

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Purpose The purpose of this paper is to empirically examine the return and dividend characteristics of two different types of Malaysian real estate investment trust (REIT) series, namely, conventional and Islamic, against macroeconomic variables over the period 2011-2017. Design/methodology/approach The required data are derived from Datastream database. Multiple regression analysis is used to determine the impact of macroeconomic variables on financial performance of 13 Malaysian REIT series. Findings Results show that the macroeconomic variables are able to predict future returns and dividends of Malaysian REITs. The analysis also suggests that Islamic REITs are seen to be less sensitive to macroeconomic variables and display better portfolio diversification benefits as compared to their conventional counterpart. The ongoing implications for large-cap and small-cap REITs are also highlighted. Research limitations/implications The main limitation of the study is the small percentage of Islamic REITs sample due to limited period of observation available. However, the two Islamic REITs included are representative of Islamic REITs in Malaysia as both of them are listed in the Bursa Malaysia with asset size and market capitalization values more than RM1bn. Practical implications The results of this study may serve as a useful input for financial market players on making strategic business decisions especially with regards to differences between conventional and Islamic REITs characteristics. Originality/value The main contribution of this paper is to explore the relationship between REITs and macroeconomic factors on a unique capital market (Malaysia) that allows comparison between conventional and its Islamic counterpart.

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Section: Islamic Real Estate Investment Trusts In Malaysiamentioning

confidence: 88%

Conventional REITs, Islamic REITs and macroeconomic variables in Malaysia: a review

Sukor

Sujak

Noordin

2020

IJIF

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“…For example, Dewandaru et al (2017) focus on the development of I-REITS which will consequently provide the diversification advantages to potential investors, since there are very limited available I-REITs in global market with mostly established in Malaysia. The preliminary studies find that I-REITs perform better (Newell & Osmadi, 2009;Rozman et al, 2015) and have lower systematic risk (Razali & Sing, 2015) compared to conventional REITs.…”

Section: Performance Of Islamic Mutual Fundsmentioning

confidence: 96%

A Review of Islamic Investment Literature

Hassan

Aliyu

Paltrinieri

et al. 2018

J of App Econs and Policy

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This paper reviews the empirical literature on the contemporary issues of Islamic investments and highlights the future research directions. The growing literature during the last several years and the penetration of Islamic investments beyond the Muslim majority countries motivate us to review the empirical studies in the area. We therefore focus our literature review on mutual funds, sukuk and equity investments, analysing 81 articles from the most important journals dealing with the topic. The mixed findings in this area help the understanding of professionals not familiar with Islamic investment to identify the trends of the literature for important decisions. Our results have also important financial implications for asset managers willing to include Islamic financial instruments into a well-diversified portfolio.

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“…While Shariah REITs have similar characteristics as conventional REITs, such as low risk, defensive characteristics and provide diversification benefit, those characteristics of Shariah REITs are enhanced during the global financial crisis. Razali and Sing 2015 Rozman et al (2015) compared the portfolios between Shariah compliant and non-compliant REITs in Malaysia also found that the compliant portfolios outperformed the non-compliant portfolio over a 10-year period from 2004 to 2014 on both an equal-weighted and value-weighted basis. They argued that this was because of the specialist nature of the assets held by Islamic REITs in Malaysia that was mainly concentrated in the plantations and healthcare sector.…”

Section: Islamic Finance and Reitsmentioning

confidence: 98%

“…Furthermore, the past decade has seen an increasing application of REITs as a vehicle for Shariah investments. This is particularly among smaller scale individual Islamic investors and smaller Islamic funds that would not otherwise be able to acquire large-scale commercial real estate (Rozman, Azmi, Mohd Ali, & Mohamed Razali, 2015).…”

Section: Introductionmentioning

confidence: 99%

Does Faith Has Impact on Investment Return: Evidence From Reits

Zhang

Sun

Wang

et al. 2019

International Journal of Strategic Property Management

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This paper investigates whether faith has impact on investment returns. Specifically, we choose the Shariah compliance and REITs investment for the purpose of investigation. Synthetic Shariah compliant portfolios are constructed with various interpretation of compliance. We compare the performance of Shariah compliant portfolios with US Equity REIT portfolio during 1993–2017 by examining the abnormal returns using CAPM and Carhart four-factor model. We find no evidence of underperformance or outperformance of the Shariah compliant investments. This is also true during the financial crisis periods which is confirmed by the sub-sample analysis. Our findings suggest that Shariah compliant REIT investor faces no cost or gain in his investments as a result of his faith.

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THE PERFORMANCE AND SIGNIFICANCE OF ISLAMIC REITs IN A MIXED-ASSET PORTFOLIO

Cited by 7 publications

References 5 publications

Conventional REITs, Islamic REITs and macroeconomic variables in Malaysia: a review

Conventional REITs, Islamic REITs and macroeconomic variables in Malaysia: a review

A Review of Islamic Investment Literature

Does Faith Has Impact on Investment Return: Evidence From Reits

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