This document discusses a presentation on the performance of Islamic equity funds given by Karen Hunt Ahmed at the Midwest Finance Association on March 4, 2011. It provides background on Islamic finance, highlights challenges in researching Islamic funds due to lack of data and standards, and outlines the goals and questions of the presenter's research paper analyzing the performance of Islamic equity funds around the world. The research finds mixed results on whether Islamic funds outperform conventional funds and that regional differences may be confounded with whether a country is Muslim or not.

1. ON THE
PERFORMANCE OF
ISLAMIC EQUITY
FUNDS
DISCUSSANT: KAREN HUNT AHMED
MIDWEST FINANCE ASSOCIATION
MARCH 4, 2011

2. ISLAMIC FINANCE
Petro dollars + Global political movements + Islamist thought
out of India/Pakistan + Malaysia CG support
Related to ethical investing movements
Manifests differently in different regions of the world
Maliki, Hanafi, Shafi’I, Hanbali, Ja’fari
AAOIFI provides some standards
Profit maximization is not the only business goal
Promotes economic and social development through
business practices and zakat
Shari’a Standards Board (SSB)

3. RESEARCH IN IF
New industry:
Dearth of reliable data
Dearth of good quality research
But growing availability via international research sites and
ratings agencies
Research in IEFs: existing studies = inconclusive results
Current paper: first extensive analysis of IEFs

4. CHALLENGES TO IF
RESEARCH
Reliable data
Different regulations
How to measure non-financial factors?

5. CHALLENGE:
Basing evaluation [of Islamic funds] on only matters of
outperforming or underperforming conventional fund ignore
an essential facts about the Islamic fund, which that these
funds were created not as a solution to the downside of the
conventional funds, but as a solution to the source of profit
that the Islamic law prohibits.
Aateqa Hasan
DePaul/BIBF

6. GOALS OF THE PAPER
Comprehensive study of IEFs
around the world
Yes
Better understand workings of IEFs Need case studies
Contribute to literature: do IEFs
outperform non-Islamic funds?
Findings mixed; support for
literature
Examine effect of regional
differences
Confounded with Muslim/non-
Muslim?
Pitiluck and ethical mandates
Contributes to methodology:
performance measure for IF
Yes

7. QUESTIONS/FURTHER
RESEARCH
When measuring “return”, is there a standard way to account
for purification?
At what level should purification take place: fund or
individual returns?
Does it matter how many Shari’a Scholars are on the SSB in
terms of financial evaluation?
Finding: Shari’a compliance/Muslim country dummy perform
better. Is there a better way to measure this?
A big part of IEF are the “non-financial” aspects. How should
they be dealt with?
How would “knowing” the answer to these questions change
or impact current IEF management practices?