20. Islamic Mutual Funds' Performance in Saudi Arabia

  1. Karen Hunt-Ahmed
  1. HESHAM MERDAD1 and
  2. M. KABIR HASSAN2

Published Online: 4 FEB 2013

DOI: 10.1002/9781118653814.ch20

Contemporary Islamic Finance: Innovations, Applications, and Best Practices

Contemporary Islamic Finance: Innovations, Applications, and Best Practices

How to Cite

Hunt-Ahmed, K. (2013) Islamic Mutual Funds' Performance in Saudi Arabia, in Contemporary Islamic Finance: Innovations, Applications, and Best Practices, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118653814.ch20

Author Information

  1. 1

    Assistant Professor, Department of Finance and Economics, King Fahd University of Petroleum and Minerals

  2. 2

    Associate Professor and Chair of Finance Department, University of New Orleans

Publication History

  1. Published Online: 4 FEB 2013
  2. Published Print: 22 JAN 2013

ISBN Information

Print ISBN: 9781118180907

Online ISBN: 9781118653814

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Keywords:

  • Saudi Arabia;
  • Shariah-compliant mutual funds;
  • Islamic mutual funds;
  • investment portfolio

Summary

This paper investigates one of the most important issues raised in the Islamic mutual fund literature: Does investing in Islamic mutual funds come at any cost? This chapter is an empirical study in which we assess the performance and risk factors of Saudi Islamic mutual funds relative to Saudi conventional mutual funds for the period from July 2004 to January 2010. Findings from this paper suggest that the risk-return profile of Saudi mutual fund portfolios depends on the geographical focuses of these fund portfolios. Investors might benefit by considering investments that adhere to the precepts of the Shariah law (i.e., locally focused funds that invest in assets located only in Saudi Arabia). On the other hand, it seems that investors might incur a cost by considering investments that adhere to the Shariah law (i.e., Arab- and/or internationally focused funds that invest in assets located in countries other than Saudi Arabia).