A comparative analysis on the performance of investment linked plan for insurance and takaful in Malaysia

Abdul Aziz, Mariam and Redzuan, Nur Harena and Othman, Anwar Hasan Abdullah (2020) A comparative analysis on the performance of investment linked plan for insurance and takaful in Malaysia. In: 8th ASEAN Universities International Conference on Islamic Finance (8th AICIF 2020), 24th-26th November 2020, Bogor Indonesia. (Unpublished)

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Abstract

Investors are looking for an appropriate investment portfolio to satisfy their investment preferences and financial needs. Hence, the introduction of investment linked plans provide an opportunity to invest and protect their funds in an appropriate way. This study is aimed to compare the performance of both takaful and insurance investment linked plans in Malaysia in order to help the investors in planning and determining their portfolio diversification. The study uses correlation analysis to examine the existing relationship between the investment linked plans’ returns with the market returns. The independent sample t-test is conducted to investigate the significance differences between both investment linked plans. The study examines the return and risk profiles of both investment linked plans by measuring the secondary data using the net asset value (NAVs) of the selected funds on a monthly basis. The data covers a three-year period from January 2016 to December 2018. Three models of the standard performance measurements are employed which are: Sharpe, Treynor, and Jensen indices to measure the funds’ performance. The findings show that the takaful investment linked plans outperform the insurance investment linked plans in Malaysia during the study period, and the takaful investment linked plans produce greater returns as compared to the insurance counterpart. The study also finds that none of both the takaful and insurance investment linked plans outperform their markets except in Year 2. Furthermore, the findings of this research indicate that there is no difference between the performance of both investment linked plans based on the three performance indices during the study period. As the outcome this research, it is advisable for potential investors of investment linked plan, who require both protection and investment to consider the takaful product as they can expect a higher profit than the counterpart.

Item Type:	Conference or Workshop Item (Slide Presentation)
Additional Information:	8441/87225 Online conference
Uncontrolled Keywords:	Investment linked plan, insurance, takaful, performance analysis
Subjects:	H Social Sciences > HG Finance > HG8011 Insurance H Social Sciences > HG Finance > HG8719 Islamic Insurance Takaful
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	Nur Harena Redzuan
Date Deposited:	06 Jan 2022 12:08
Last Modified:	06 Jan 2022 12:08
URI:	http://irep.iium.edu.my/id/eprint/87225

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