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How attractive is Shariah Index Fund?

Mohd Yusop, Mohd Mahyudi and Omar, Mohd. Azmi (2009) How attractive is Shariah Index Fund? In: IIiBF Series in Islamic Banking and Finance: 1. IIUM Institute of Islamic Banking and Finance, Kuala Lumpur, pp. 175-200. ISBN 9789834456801

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Abstract

Hakim and Rashidian (2002) observe that there is an increasing interest in socially responsible investments and index funds worldwide. Based on this point, a shari'ah index found seems to posses huge potentials for it carries the appeal of being both, a socially responsible investment and index fund. In the Malaysian context, high savings rate and low units trust contribute to the success of a shari'ah index fund. This study aims to analyze and evaluate the performance aspects of the Kuala Lumpur Shariah Index (KLSI) as compared to KLCI and RHB Islamic Index (RHBII) since April 1999 until June 2005, in order to complement the promising outlook of a shari'ah index fund. The method employed involves the measurement of performance; and measurement of risk, selectivity and timing. It also attempts to discover the characteristics of beta for Islamic stocks in Malaysia, as estimated via the market model using the ordinary least squares and generalized method of moments techniques. The findings show that the Islamic betas are positive and less than one. More importantly, the results reveal that the KLSI is of poorer quality than RHBII and the KLSI is of not market competitive. Thus, we conclude by propping the introduction of the Islamic version of the KLCI.

Item Type: Book Chapter
Additional Information: 5952/7328
Uncontrolled Keywords: Shari'ah index fund, Islamic investment product
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG1501 Banking
K Law > KBP Islamic Law > KBP1 Islamic law.Shariah.Fiqh
Kulliyyahs/Centres/Divisions/Institutes: Kulliyyah of Economics and Management Sciences
Depositing User: Sakinah Kamaludin
Date Deposited: 15 Nov 2011 15:31
Last Modified: 24 Nov 2011 11:14
URI: http://irep.iium.edu.my/id/eprint/7328

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