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One of the implications of Islamic investment principles is the availability of Islamic financial instruments in the financial market. The main aim of this research is to observe the differences in terms of performance between Islamic and conventional mutual fund in the context of Malaysian capital market.

To achieve the major objectives of this paper standard methods wereused for evaluating the mutual funds performance, for example, Sharpe index and adjusted Sharpe index, Jensen Alpha, Timing and selectivity ability. The scope of the paper is to measure the relative quantitative performance of funds which was managed based on two different approaches.

The basic finding of the paper is that Islamic funds performed better than the conventional funds during bearish economic trends while, conventional funds showed better performance than Islamic funds during bullish economic conditions. In addition to that finding, both conventional and Islamic funds were unable to achieve at least 50 per cent market diversification levels, though conventional funds are found to have a marginally better diversification level than the Islamic funds. The results also suggest that fund managers are unable to correctly identify good bargain stocks and to forecast the price movements of the general market.

The main limitation is that the samples of conventional and Islamic mutual funds were from one developing market. The findings could be better validated if the sample included the mutual funds from other developed and developing economies, where both Islamic and conventional funds are available.

The findings suggest that having Islamic mutual funds in an investment portfolio helps to hedge the downside risk in an adverse economic situation.

So far there is no published evidence on the relative performance of Islamic and conventional mutual funds in Malaysia as well as other developing countries. Therefore, this paper adds new knowledge to the mutual funds literature.

This study aims to test mutual fund superiority, comparing the performance of 646 Islamic mutual funds with 475 ethical funds and conventional proxies.

This study uses statistical methods including paired t-statistics of independent samples, one-way Bonferroni test–analysis of variance–F-statistic for testing means equality, the chi-squared test for median equality and regression models corrected for heteroscedasticity. These methods are used to identify superiority of mutual funds and to validate the significance of the results.

The findings confirm the superiority of conventional funds over ethical funds and ethical funds over Islamic funds. Both ethical and Islamic funds, however, outperform conventional proxies during some recessionary periods. Moreover, stronger performance is recorded for Islamic funds in Europe and North America regions and across age and asset allocation categories, but limited support for reversal fund size, composition focus and reversed price effect.

These findings should assist investors when deciding to invest and motivate Islamic and ethical funds to improve their portfolio formation and asset allocation strategies set by their professional managers.

The originality of this study is in its comprehensive approach in that it compares the performance of funds after accounting for such characteristics as fund objectives, size, age, asset allocation, geographical investment focus, fund composition focus, share price levels and the effect of global crises. This study approach is not only original and productive in documenting Islamic funds’ performance for the past three decades (1990–2022) but can also update the literature on these characteristics collectively and individually.

This paper aims to provide bibliometric data from previously published research in Islamic fund management. Several categories, such as the most influential authors, the keywords and themes of the previously published research, were analyzed. Also, this paper provides a rigorous background for Islamic mutual funds research by synthesizing and reviewing the content of the previously published research to identify the gaps and provide future research direction.

Data were gathered from Scopus databases from the year 2007 until 2022. A total of 115 articles were found published over the period of 15 years. Three different software, namely, R-Studio, VOSviewer and Excel are used to analyze the data that depict, among others, the most impactful authors in the field, the top journals covering Islamic fund management research and the most cited document. Content analysis of the previously published research was also provided.

Publication in Islamic funds started gaining attention in the year 2012 and after. Collaborative works on Islamic funds are not strong yet among the contributory nations, although the USA and Malaysia contributed the highest number of publications. This study also found that there was a lack of research collaboration among authors in this research field, and most of the articles published were concentrated on the performance measurements of Islamic funds.

Researchers might find the results of this paper useful, as they provide a comprehensive analysis of the previously published research in the field.

While these findings gave an overview of the intellectual structure of the research field, they also have the potential to inspire scholars working on Islamic funds research to collaborate on new research projects. Managers can also use this research to further enhance the emergence of Islamic fund management.

This is a comprehensive paper that examines previously published research in the field of Islamic fund management. The findings of this research benefit practitioners and researchers wishing to embark on research in this niche area.

This paper evaluates the performance of actively managed conventional and Islamic equity funds in a developing economy with a focus to assess the performance-growth puzzle posited by Gruber (1993) (a.k.a Gruber’s puzzle). Under the context of an emerging market of Pakistan, this study explores if actively managed equity fund (AMEF) managers have been able to add value by outperforming the market in terms of stock-selection and market-timing abilities; and the comparative performance analysis of Islamic versus conventional AMEFs is also carried out.

We employ Sharpe and Treynor ratios, Capital asset pricing model, Fama–French three factors model (1993), Carhart four-factor model (1997) and Hendrickson (1981) market timing models on 45 equity funds comprising of 23 conventional and 22 Islamic equity funds operating in Pakistan for a period of 10 years. The overall sample period (2008–2018) is divided into two 5 years sub-periods (i.e. 2009–2013 and 2014–2018) and three 3 years sub-periods (2009–2011, 2012–2014 and 2015–2017) to be viewed in conjunction with the country's macro-economic condition.

We report that the actively managed equity funds (AMEFs) were unable to beat the market index with their stock selection or market timing capabilities. However, AMEFs depicted improved performance in the post-global financial crisis period where both conventional and Islamic AMEFs generated substantial rewards for the given amount of risk. Also, conventional AMEFs outperformed Islamic AMEFs potentially due to their holdings in highly leveraged value and large-cap stocks, while Islamic AMEFS invest more cautiously in small-cap and value firms. Analysis of market timing skills revealed that the funds have not been able to select the undervalued stocks and adopted a defensive strategy in the post-global financial crisis recovery period.

Our findings shed some interesting insights and raise some pertinent questions for research, policy, and practice – specifically for developing countries’ context. The no ‘return-growth’ configuration defies its fit with the ‘Gruber puzzle’ and somewhat presents a case of what we call the ‘Inverse Grubber puzzle’. This novel notion of the ‘Inverse Grubber puzzle’ should inform policy and practice to reflect on their practices, institutional arrangement, regulatory framework and policy design in developing economies characterized by lacklustre performance and growth of AMEFs. For example, the regulatory design may consider focusing on stimulating financial inclusion and deepening by motivating low-cost Index tracker funds (ITFs) – with lower fund management costs, while allocating the avoided cost to flow towards effective marketing campaigns driving greater awareness, financial deepening, and investor base diversification. For future research, financial development researchers may explore the implications and appropriateness of AMEFs versus ITFs in other developing economies.

The work reported in this paper is original and constitutes a valuable asset for ethno-religious-sensitive investors. The research has not been published in any capacity and is not under consideration for publication elsewhere.

The purpose of this paper is to assess the benefits to investors of international diversification among only Islamic funds. Compared to conventional investors who are not restricted in their choice of funds, Islamic investors are restricted to investing in shari’a-compliant funds, thus giving up some diversification benefits. The possibility of international diversification among only Islamic funds may thus help Islamic investors to invest in accordance to their religious beliefs and still benefit from diversification.

The paper assesses the benefits of diversification by analyzing the extent of co-integration among four regional Islamic funds and by estimating the short-term and long-term structural dynamics of and among these funds. The paper uses an Autoregressive-Distributed Lag (ARDL) approach to testing the long-run relationships among these funds and use variance decomposition and impulse response functions to examine the structural dynamics of the relationship between these funds. These methods can also be used for predictive purposes and represent, in authors opinion, a useful approach that complements the traditional methodology of static covariance matrix to find the efficient frontier at a given moment in time.

The results indicate that international diversification can help reduce risk if Asia Pacific Islamic funds and MENA region Islamic funds are invested contemporaneously and/or Asia Pacific Islamic funds and North America Islamic funds, and/or Europe funds and MENA funds. The paper also finds that investors would benefit from investing in North American funds and MENA funds both in the long run and in the short run. Conversely, the paper finds that Europe funds and North American funds are co-integrated in the long-run precluding the opportunity for substantial diversification benefits from these particular portfolio mixes.

The long-run analysis helps passive fund managers and investors in composing their portfolio by providing evidence that some portfolio mixes of different regional Islamic funds lead to better risk return performance than one regional Islamic fund portfolios. The short-run analysis however helps the active fund managers and investors as it suggests that diversifying in the short run and reviewing their portfolio on a regular basis would be beneficial as well.

This analysis justifies the promotion of Islamic finance as the negative correlation between several Islamic funds across the regions studied suggests better opportunities of investments via international diversification making Islamic funds more desirable.

The purpose of this paper is to examine the nature and structure of Islamic investment funds and evaluate their governance.

The methodology employed is the conceptual framework of Islamic economics.

It is found that Islamic investment funds have grown rapidly this decade: in Malaysia alone, the number of shari'a‐compliant funds has grown from 17 in 2000 to 149 in 2008, and at a global level there are 650 funds in operation. However, the industry has developed in a particular way, by focusing on negative screens, and removing from investments those activities deemed to be unacceptable to Islamic precepts, rather than pursuing as well the implementation of other aspects of the Islamic ethos.

The conclusion reached is that, if the Islamic investment fund industry is to provide more completely for the religious and financial aspirations of investors, it needs to go beyond the negatives and to also accentuate the positive and, drawing upon Islamic governance guidelines, actively seek out investments that have a positive impact on society and the environment and promote the welfare of the community. These issues hitherto have been largely unexplored.

The growing demand for alternative investment vehicle which adheres to shari'a principles has prompted other measures to boost the Islamic capital market. Unit trust funds in Malaysia have been growing exponentially and their existence signifies the extent of development in the Malaysian financial market. For foreign and domestic investors who have low risk tolerance and wish to diversify, unit trust funds offer the opportunity to invest. The increasing relevance of unit trust funds as an investment instrument has driven us to analyze the fund's performance. This paper addresses these issues.

The paper examines the comparative performance of Malaysian unit trust funds vis‐à‐vis their non‐Islamic counterparts using a variety of measures, such as Sharpe, Treynor, Jenson and Fama's selectivity, net selectivity and diversification. The paper also examines the persistence of performance using Carhart's four‐factor pricing models. Lastly, the paper employs an analysis of cointegration to examine how the Islamic unit trust funds are related in long term with their non‐Islamic counterparts, as well as their respective market portfolios.

The paper finds no convincing performance differences between Islamic and non‐Islamic Malaysian unit trust funds. Controlling performance for style differences, the paper finds that non‐Islamic unit trust funds in Malaysia are value‐focused while Islamic unit trust funds are small cap oriented. In addition, similar reward to risk and diversification benefits exist only between Islamic and non‐Islamic Malaysian unit trust funds.

The Worldscope data are used to construct four‐factor models as opposed to Malaysian‐based data – given that Malaysia is an open economy that attracts global investors. Also, US T‐Bill rate is used rather than Malaysian risk‐free rate because no other securities are as riskless as US Treasury Bills.

The paper observes a significant long‐term relationship between Islamic unit trust funds portfolio and non‐Islamic unit trust funds portfolio. The implication here suggests that investors in Malaysian unit trust funds will most likely benefit from international diversification of financial risks. They do not, however, stand a good chance to gain from portfolio diversification in the local unit trust funds market.

The study contributes to the existing Islamic investment literature by pursuing an empirical analysis on the performance of both Islamic and non‐Islamic Malaysian unit trust funds by using more recent data and further investigating the long‐run relationship between Islamic and non‐Islamic unit trust funds.

The purpose of this paper is to examine the impact of Shariah guidelines on the performance of the Dow Jones Islamic Index (DJIM-US). Shariah or Islamic law is a set of rules that determines Islamic allowed activities including socially and ethically acceptable investments.

The authors apply four risk-adjusted methodologies and co-integration analysis to investigate whether limited asset universe Shariah investments limit investment opportunities and impose an opportunity cost on investors given the prediction of conventional portfolio theories.

In contrast to the prediction of conventional portfolio theories, the findings suggest no apparent opportunity cost for Shariah compatible investments. In particular, Dow Jones Islamic Mutual Funds do not under-perform the broader market US benchmarks nor do they have any co-integration with the broader indexes. Moreover, the authors find similar evidence in the studies of Islamic mutual funds in Saudi Arabia, Malaysia and Kuwait.

The findings will be reinforced when the authors will look into long run performance of Shariah compliant funds in future. Using non-linear approach will add further clarity to the findings.

The results provide an insight suggesting that successful mutual fund managers are able to overcome Shariah restrictions and constraints through creative investment strategies. In the data set, the Amana Trust Growth fund and the Amana Trust Income fund were always the best performers with a highly significant abnormal return, no matter what the methodology was.

The performance of Islamic funds during the approximately seven-year period covered by the study is very promising. Popularity of Islamic Investment is expected to grow as Muslim population represents about 25 percent of the world population and the possibility for the Muslim funds to be considered as viable alternative by non-Shariah abiding or non-Muslim investors. The empirical results in the paper provide evidence that lack in diversification did not constrain the performance of Islamic funds.

This paper applied comprehensive risk-adjusted methodologies and co-integration analysis to Islamic Funds for a seven-year period for multiple countries. The findings confirm previously obtained results and highlight the fact that constrained Islamic Funds may not under-perform as per conventional portfolio theories.

This study aims to comparatively analyze the performance of Islamic and conventional income and equity funds using various performance evaluation methods.

The authors comparatively analyze the performance of mutual funds using measures, such as tracking error, Sharpe ratio (1966), Treynor ratio (1965), M-square measure by Modigliani and Modigliani (1997) and information ratio. The authors also use market timing and selection measures, such as Treynor and Mazuy model (1966), Henriksson and Merton (1981) model and Fama’s decomposition approach (1973).

The authors find that Islamic equity funds are as much competitive as conventional equity funds. All Islamic equity funds have positive Sharpe ratio, Treynor ratio and net selectivity measure. Islamic equity funds are slightly less risky in general. Islamic equity and income funds generally have positive Jensen's Alpha and a positive market timing ability. However, the authors find that Islamic income funds generally underperform the market due to less Shari’ah-compliant investment class assets in the market.

It will help the industry players to assess their strategic positioning with regard to the commercial competitiveness of Islamic investments.

The authors take considerably large sample of 60 funds in Pakistan as compared to previous studies and also cover recent period (2006-16). For income funds, the authors construct an original benchmark index based on price and dividend data and use that in performance assessment.

The global Islamic financial landscape is changing with rapid advances in technology. The increasingly tech-savvy demography is presenting both opportunities and challenges to the industry. With the advances in e-finance and mobile technologies, financial technology (Fintech) innovations emerged by combining the e-finance, Internet, social networking services, social media, artificial intelligence (AI) and big data analytics. Fintech promises to reshape the Islamic financial landscape by improving processes’ efficiencies, cost-effectiveness, increased distribution, Sharīʿah compliance and financial inclusion. As far as the Islamic fund management industry is concerned, AI seems to be the keyword. Islamic fund managers have recently started to incorporate AI and big data analytics into their strategy in the process of making accurate decisions based on facts and figures, which eliminates any biases and personal intuition. This disruption in status quo is raising new issues, new concerns and new exciting opportunities. While disruption may carry negative connotations, the industry players have been embracing the innovation and potential revolution the technology could offer. Thus, the objective of this chapter is to discuss legal aspects of Fintech and its impact on the Islamic fund management industry in Malaysia. This chapter introduces a historical overview of Fintech and its evolution in the Islamic fund management industry. This chapter further provides an overview of the legal and regulatory aspects of Fintech with regards to the industry. Finally, legal issues and challenges are identified and discussed. Being a legal research, this chapter adopts a qualitative method by analysing the relevant literatures on the subject. This chapter is expected to provide an insight into the application of Fintech and its impact on the Islamic fund management industry in Malaysia.