Islamic and Conventional Mutual Funds Performance in Pakistan Pre and Post Covid 19

Abstract

In this study we took five traditional mutual funds and five Islamic mutual funds and compared their performance based on their purchase price. The time period we have chosen is pre covid ,during covid and post covid which is between years 2018 till 2022. We have used sharp ratio, the Treynor ratio, and Jensen's alpha ratio for performance comparison. This paper presents our findings. We have kept a close eye on the results, and over the past five years, we have noticed that the performance of both types of funds was not drastically different from one another, but rather, it was very close to being the same. Despite this, the risk of these funds with a lesser security remains higher, as the ratios have been in the negative for almost all of those years. This could be due to the typical performance of the stock market or to the unpredictable market patterns. Although there is less investment or lower equity investment in Islamic funds, it has been a pleasant surprise that they have performed better and have come at par with those of conventional funds. This indicates that if the Islamic capital market invests or diversifies more in Islamic mutual funds, they could give even better returns. As can be seen, Al Meezan had a greater return on investment than any of the other funds in the year 2022. Furthermore, it had a better return on investment in prior years as well, with a higher ratio of 6.16, and it has been the most successful banking firm over the last several months.