Comparative risk adjusted performance of Islamic, socially responsible and conventional funds: Evidence from United Kingdom

Krishna Reddy, Nawazish Mirza, Bushra Naqvi, Mingli Fu
  • Economic Modelling, November 2017, Elsevier
  • DOI: 10.1016/j.econmod.2017.07.007

Are Islamic funds riskier than SRI and Conventional Funds

What is it about?

We differentiate between SRI and Islamic funds for a fair performance and style comparison.

Why is it important?

This study investigates the risk and return characteristics of Islamic funds in comparison with SRI and the conventional open-end mutual funds for the UK, which, having attracted over £11.7 billion in Islamic investment in the past decade has emerged as the largest financial market for Islamic funds in the west. In addition, contrasting with previous literature, this research categorizes SRI and Islamic funds into two distinct types in order to allow a fair comparison.

Perspectives

Dr Krishna Reddy
University of Waikato

Islamic and SRI funds demonstrate better risk adjusted returns than conventional funds. Islamic and SRI funds were less sensitive to financial crisis compared to conventional funds. Faith based screening do not affect the returns of Islamic and SRI funds adversely.

Dr Krishna Reddy
Toi Ohomai Institute of Technology

Despite relatively better returns performance, the costs associated with Islamic funds make them as attractive to fund managers as SRI and conventional funds.

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http://dx.doi.org/10.1016/j.econmod.2017.07.007

The following have contributed to this page: Dr Krishna Reddy and Dr Krishna Reddy