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Selectivity and Market Timing Ability of Fund Managers: Comparative Analysis of Islamic and Conventional HSBC Saudi Mutual Funds

by Marwa Zouaoui 1,2
1
Department of Finance, Northern Border University, Arar 91431, Saudi Arabia
2
Department of Finance, ISG Tunisia, University of Tunis, Tunis 20000, Tunisia
Int. J. Financial Stud. 2019, 7(3), 48; https://doi.org/10.3390/ijfs7030048
Received: 2 June 2019 / Revised: 25 July 2019 / Accepted: 27 August 2019 / Published: 3 September 2019
This paper empirically compares the market timing, the stock selection and the performance persistence of Islamic and conventional HSBC Saudi mutual funds by using monthly returns from April 2011 to December 2018. The data was grouped into five portfolios based on geographical investment basis (locally, Arab, internationally) and Sharia compliance (Islamic and conventional). The empirical results indicate that Islamic funds underperformed conventional funds internationally but not locally. Findings suggest that the market selectivity skills of managers in the Islamic funds are better than the conventional funds. In addition, only the managers of Saudi conventional funds investing internationally have a good market timing skills, thus, they are able to beat the market index by predicting its movements and buying and selling accordingly. Furthermore, this study gives a brief idea about the performance persistence of HSBC Saudi funds. The results confirm existence of the persistence performance when the funds do not apply Sharia law and when they are instead focused internationally. View Full-Text
Keywords: Islamic mutual funds; performance analysis; performance persistence; market timing; selectivity skills; GARCH modeling Islamic mutual funds; performance analysis; performance persistence; market timing; selectivity skills; GARCH modeling
MDPI and ACS Style

Zouaoui, M. Selectivity and Market Timing Ability of Fund Managers: Comparative Analysis of Islamic and Conventional HSBC Saudi Mutual Funds. Int. J. Financial Stud. 2019, 7, 48.

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