Islamic mutual funds (IMF) are growing as a substitutional investment vehicle for investors who want to combine value and financial objectives in their investment. A group of the funds is managed by one Investment Company called the family of funds, different families follow different strategies that distinguish them from each other. This study investigates the flow-performance relationship in IMF, in addition to the extent to which family and fund characteristics contribute to explaining fund flows in Malaysia for the period from 2009 to 2017. The study uses raw returns to calculate the fund performance and use the percentage money flow (FLOW), defined as money flow scaled by the total net asset of the fund. The study use panel regression models to estimate the relationship between fund flow and performance, fund, and family variables. The results show there are positive relationship between past performance and fund flow that mean IMF investors make rational financial decisions by directing fund flows to better performing funds. The results also indicate there are negative relationship between fund flows and fund risk may be due to IMF performing better during the bearish market since the risk is high. Finally, the results indicate there are negative relationship between fund flows and fund size, family size, number of funds in the family, this may be because when family or fund become larger and included more funds can’t preserve the same high growth rate.

Islamic mutual funds (IMFs) have been growing as an alternative investment vehicle for investors who want to combine value and financial objectives in their investment. A group of funds is managed by an investment company called a family of funds, and different fund families follow different strategies that distinguish them from each other. In addition to this, characteristics of fund families influence the performance of fund families. This study investigates the extent to which fund families and fund characteristics contribute to explaining fund returns differentiated by managers’ stock selection and market timing abilities in Malaysia for the period 2009 to 2016. In the first step, the study used Jensen’s (1968) model to calculate the fund performance, and the Henriksson and Merton model (1981) and Treynor and Mazuy (1966) to separate the performance into a market timing and fund selection. In the second step, using the coefficient estimates of fund selection and timing measures as dependent variables, the study tested the extent to which fund family and fund characteristics are associated with selectivity and timing performance measures. The results show the managers of IMFs have poor selectivity skills and good market timing ability. The results also show that fund family characteristics have a significant impact on the performance of Islamic funds' in Malaysia whether using the Treynor and Mazuy (T&M) or the Henrikson and Merton (H&M) model.

The aim of this study is to compare the performance of Islamic mutual funds (IMFs) and conventional mutual funds (CMFs) within the same family, and also to examine the performance of fund families in Malaysia over the period 2007 to 2018. The study uses eight measures of performance: raw returns, excess returns, the Sharpe ratio, the Treynor ratio, Jensen’s alpha and Carhart’s four-factor model as selectivity models, in addition to the Treynor and Mazuy (TM) and Hendrickson and Merton (HM) as market timing models. The study contributes by investigating and comparing performance at the family level. The results show that IMFs exhibited certain fund selection ability over CMFs. However, both types of fund displayed poor market timing ability. At the fund family level, the results show that families exhibited good fund selection skills, but at the same time poor market timing ability. The novel findings of the study relate to the difference in performance between Islamic and conventional funds; shrank compared to the results of previous studies. Due to the common advantages offered by the families for both types of funds. The findings are important for investors because the results provide new evidence about fund family performance. Most investors follow the top-down approach, whereby mutual fund investors initially choose fund families before deciding which specific funds to hold. In addition, the results are important for managers to decide which types of funds that should perform well in the future they could include to their own families.

The paper investigates the fund family performance persistence in Saudi Arabia, Malaysia, Indonesia and Pakistan for one-, six-, and twelve-month period. The contingency table is used to identify the frequency with which fund families are defined as winners or losers and maintain that rating over succeeding time periods. The superior persistence is found in one-month period where investors can use past information for up to one month as a beneficial part of their investment decision-making process. There is some evidence for superior persistence up to six month period (in Malaysia), and there is some evidence of an inferior persistence in one-month (only in Indonesia). This suggest that past performance is not predictive of future performance. This research presents new evidence of performance persistence at the fund family level in emerging markets. The results are useful for both the investors and managers where managers can position themselves relative to their competing peers and take the necessary decision or improvement to make themselves seen more competent. While for investors, they are able to allocate their capital more efficiently to funds that are better managed by the fund family. Investors are able to use this information when they want to apply top down approach in making their investment decision. This is the first study that investigates the performance persistence at fund family level to benefits investors that apply top down approach in their fund selection decision.

The paper investigates the selectivity and market timing ability of fund houses in emerging countries. The study uses comprehensive performance models on fund houses from four emerging countries. Data span is from 2007 to 2018. Findings indicate that fund managers benefit from the common facilities provided by the fund houses like market research, diversification and investment opportunity. Fund houses showed good selectivity skills but poor market timing ability. The possible reason is that fund houses manage large and different types of funds. This resulted in more complex management processes and thus reduced the ability to track the fluctuations in the market. The findings are important for investors as they are able to allocate their resources more effectively to funds that are best managed by fund houses while for managers, they are able to position themselves relative to their competing peers.

The aim of this study is to investigate star and poor phenomena and their impact on the flows of Islamic-focused family (IFF) and conventional-focused family (CFF). The sample includes the four emerging countries with the largest number of Islamic mutual funds from 2007 to 2018 (Saudi Arabia, Malaysia, Indonesia, and Pakistan). Panel regression analysis was used to examine the impact of dummy star and poor as independent variables, and family age, size, number of funds, past returns, and total risk as control variables for fund family flows. The results show that the dummy star has a significantly positive relationship with family flows. Family managers have succeeded in attracting more investors by using the strategy of advertising the best performing funds. However, in both, all families and IFF, the dummy poor has a negative relationship, but is insignificant. On the other hand, for CFFs, the dummy poor is significantly negative. This is because investors in IFFs, unlike those in CFFs, have more loyalty due to their moral and religious goals in addition to traditional goals. The novel finding of the study is the difference in the star phenomenon between the IFF and CFF. The findings are important for managers, as they will help them to create appropriate strategies to attract more flows and increase the assets under their management. In addition, the findings will help investors to direct their money to appropriate families.