A comparison between Islamic and conventional bond fund’s performance in Malaysia

The main objective for an investment is to curb inflation. Unit trust is one of common investment vehicle in Malaysia. The main purpose of this study is to compare the performance analysis on Islamic bond funds and Conventional bond funds in Malaysia. The performance of both funds was analyzed over...

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Main Author:	Koo, Von Siong
Format:	Thesis
Language:	eng eng
Published:	2015
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/5055/1/s811990.pdf https://etd.uum.edu.my/5055/2/s811990_abstract.pdf
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id	my-uum-etd.5055
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Hanafi, Norshafizah
topic	HG Finance
spellingShingle	HG Finance Koo, Von Siong A comparison between Islamic and conventional bond fund’s performance in Malaysia
description	The main objective for an investment is to curb inflation. Unit trust is one of common investment vehicle in Malaysia. The main purpose of this study is to compare the performance analysis on Islamic bond funds and Conventional bond funds in Malaysia. The performance of both funds was analyzed over a period of 48 months commencing from January 2011 to December 2014. The monthly returns of 20 bond funds, being 10 Islamic bond funds and 10 Conventional bond funds are extracted from Morningstar system. Performance of unit trust always influenced by risk and return. In this research, the fund performances are evaluated by using six performance measures namely mean return, standard deviation, beta, Treynor index, Sharpe index and Jensen index. The results of this study suggest that Islamic Bond Funds are outperformed the Conventional bond funds during the period of study. On the other hand, Conventional bond funds seem to have a lower risk than Islamic bond funds. Nevertheless, when both funds are compared by using t-Test and ANOVA, results displayed Islamic bond funds and Conventional bond funds have no difference in fund‟s performance. The findings are highly relevant to investors as well as fund managers
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Koo, Von Siong
author_facet	Koo, Von Siong
author_sort	Koo, Von Siong
title	A comparison between Islamic and conventional bond fund’s performance in Malaysia
title_short	A comparison between Islamic and conventional bond fund’s performance in Malaysia
title_full	A comparison between Islamic and conventional bond fund’s performance in Malaysia
title_fullStr	A comparison between Islamic and conventional bond fund’s performance in Malaysia
title_full_unstemmed	A comparison between Islamic and conventional bond fund’s performance in Malaysia
title_sort	comparison between islamic and conventional bond fund’s performance in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2015
url	https://etd.uum.edu.my/5055/1/s811990.pdf https://etd.uum.edu.my/5055/2/s811990_abstract.pdf
_version_	1747827852720472064
spelling	my-uum-etd.50552021-03-18T08:26:44Z A comparison between Islamic and conventional bond fund’s performance in Malaysia 2015 Koo, Von Siong Hanafi, Norshafizah Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance The main objective for an investment is to curb inflation. Unit trust is one of common investment vehicle in Malaysia. The main purpose of this study is to compare the performance analysis on Islamic bond funds and Conventional bond funds in Malaysia. The performance of both funds was analyzed over a period of 48 months commencing from January 2011 to December 2014. The monthly returns of 20 bond funds, being 10 Islamic bond funds and 10 Conventional bond funds are extracted from Morningstar system. Performance of unit trust always influenced by risk and return. In this research, the fund performances are evaluated by using six performance measures namely mean return, standard deviation, beta, Treynor index, Sharpe index and Jensen index. The results of this study suggest that Islamic Bond Funds are outperformed the Conventional bond funds during the period of study. On the other hand, Conventional bond funds seem to have a lower risk than Islamic bond funds. Nevertheless, when both funds are compared by using t-Test and ANOVA, results displayed Islamic bond funds and Conventional bond funds have no difference in fund‟s performance. The findings are highly relevant to investors as well as fund managers 2015 Thesis https://etd.uum.edu.my/5055/ https://etd.uum.edu.my/5055/1/s811990.pdf text eng public https://etd.uum.edu.my/5055/2/s811990_abstract.pdf text eng public masters masters Universiti Utara Malaysia Abdullah, F., Mohamed, S. and Hassan, T (2002). “A Comparative Performance of Malaysian Islamic and Conventional Mutual Funds, Pertanika, 8(2), 30-49. Annuar, M.N., Shamsher, M. and Ngu, M.H. (1997). “Selectivity and timing: evidence from the performance of Malaysian unit trusts”, Pertanika Journal of Social Science and Humanities, Vol. 5, pp. 45-57. Bailey, W. and Lim, J. (1992). “Evaluating the diversification benefits of the new country funds”, Journal of Portfolio Management, Vol. 18, pp. 74-80. Blake, C.R., Elton, E.J., Gruber, M.J. (1993). “The Performance of Bond Mutual Funds”, The Journal of Business, Vol. 66, No. 3, pp. 371-403 Building the foundation in CMP1, Capital market master plan 2, Securities Commission Malaysia. Choong, D. (2005). “Investor‟s guide to Malaysian Unit Trust (3rd ed). Malaysia: Saga Information Services. Chua, C.P. (1985). “The Investment Performance of Unit Trusts In Malaysia”. Unpublished MBA Thesis, School of Management, University Malaya, Kuala Lumpur. Cornell, B. & Green, K, (1991). “The investment performance of low-grade bond funds”, Journal of Finance, vol.46, no. 1.pp 29-48. Elton, E.J., Gruber, M.J., Blake, C.R. (1995). “Fundamental Economic Variables, Expected Returns, and Bond Fund Performance”, The Journal of Finance, Vol. 50, No. 4 (Sep., 1995), pp. 1229-1256. Fama, E. F., & French, K. R. (2010). Luck versus skill in the cross section of mutual fund returns, Journal of Finance, 65(5), 1915-1947. Fauziah Md. Taib and Mansor Isa (2007). “Malaysian Unit Trust Aggregate Performance”. Journal of Managerial Finance Vol. 33 No. 2. Federation of Investment Managers Malaysia (2013). “Annual Report”, pp 16. Ibrahim, M.,& Wong,A. (2005). “The corporate bond market in Malaysia”. BIS paper no.26, February: 114-128. Ilhyock Shim (2011). “Development of Asia-Pacific corporate bond and securitization markets”. BIS Papers No. 63. Jensen, M. C. (1968). “The performance of mutual funds in the period 1945–1964”. Journal of Finance, 48(1), 389–416. Kahn, Ronald N and Rudd, Andrew (1995). “Does historical performance predict future performance?”, Financial Analysts Journal; 51, 6; ABI/INFORM Global Lauren Swinkels and Pawel Rzezniczak (2009). “Performance evaluation of Polish mutual fund managers” International Journal of Emerging markets Vol. 4 No.1. Leong, K.H. and Aw, M.W. (1997). “Measuring unit trust fund performance using different benchmarks”, Capital Market Review, Vol. 5, pp. 27-44. Mahreen Mahmud and Nawazish Mirza (2011). “An Evaluation of Mutual Fund”. Malaysian Rating Corporation Berhad (2014). “Monthly Bond Market and Rating Snapshot” Mohamed, S., and Mohd Nasir, A., (1995). „The Performance of Unit Trusts in Malaysia: Some Evidence‟, Capital Market Reviews’, Vol.3, No.2, 51-59. Norafiqah, et al., (2013). “Comparative Study of Conventional and Shariah-based Unit Trust Funds Performance of Public Mutual Berhad”, College of Graduate Studies, Universiti Tenaga Nasional, Selangor. Performance in an emerging economy: “The case of Pakistan” The Lahore Journal of Economics, September: 301-316. Maslina Ahmad and Razali Haron (2006). “The performance of islamic and conventional unit trust funds in Malaysia”, International Islamic University Malaysia, Kuala Lumpur. Mayo, Herbert B. (2003). “Investments: an Introduction”, seventh edition, Thomson-South Western, Ohio, USA. Monetary and Financial Developments, Economic Reports 2012/2013, Ministry of Finance Malaysia. Nur Atiqah and Nur Adiana Hiau Abdullah (2009). “The performance of Malaysian unit trusts investing in domestic versus international markets” Asian Academy Of Management Journal of Accounting and Finance, Vol. 5, No. 2, 77–100. Reilly, F.K. and Brown K.C. (2009). “Analysis of investment and management of portfolios (9th ed.). Australia. South Western Rozali, M.B. and Abdullah, F. (2006). “The performance of Malaysian equity funds”, The Business Review, Cambridge, Summer 2006; ABI/INFORM Global, pg. Ross Fowler, Robin Grieves and J. Clay Singleton (2010). “New Zealand unit trust disclosure: asset allocation, style analysis, and return attribution”, Pacific. Segaf (2009), "The Comparative Analysis of Conventional and Islamic Bond Funds Performance”, Universiti Utara Malaysia, Sintok. Sharpe, W.F., (1966). “Mutual Fund Performance”, Journal of Business, 23, 119–138. Soo-Wah Low (2007). “Malaysian unit trust funds performance during up and down market conditions”. Journal of Managerial Finance Vol. 33 No. 2. Stephen A. Ross, Randolph W. Westerfield and Jeffrey Jaffe (2010). Corporate Finance, McGrow Hill International Edition, Ninth Edition. Tan, H.C. (1995). „„The investment performance of unit trust funds in Malaysia‟‟, Capital Market Review, Vol. 3, pp. 21-50. Treynor, J.L., (1965). How to Rate Management of Investment Funds, Harvard Review, 43(1), 63-75

A comparison between Islamic and conventional bond fund’s performance in Malaysia

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