Performance of unit trusts in Malaysia : comparison between Islamic and conventional funds during financial crisis / Fatin Najihah Ahmad Faisal

Unit trusts investment is defined as a collective investment scheme for investors, who strive to meet their investment objectives of higher returns with diversified portfolios. Unit trusts in Malaysia plays a significant role in financial development as well as economic growth. The purpose of this study is to examine the performance of conventional and Islamic unit trusts in Malaysia, with consideration of Global Financial Crisis in 2007. Thus, focusing on Malaysian-based unit trusts, which funds perform better? The time frame for this study is from 2004 until 2016. In order to investigate the impact of the economic conditions towards funds' performance, the period was further divided into three subs-periods; pre-crisis (2004-2006), during (2007-2009), and postcrisis (2010-2016), respectively. Furthermore, Adjusted Sharpe, Adjusted Jensen Alpha and Treynor Indices are used to evaluate the performance of unit trust funds. The findings showed both Islamic and conventional funds outperform during economic downturn, as compared to during pre-crisis period. On the other hand, after GFC ended, the results showed that funds were unable to outperform. Overall, funds' performance is comparable to their respective market except for Adjusted Jensen's Alpha Index, whereby, the result showed Islamic funds were underperforming. Moreover, the result also showed Islamic funds have lower beta as compared to conventional funds, thus Islamic funds have lower risk.