MARKET TIMING PERFORMANCE OF SHARIAH-BASED MUTUAL FUNDS IN PAKISTAN: FAMA FRENCH THREE FACTOR MODEL APPROACH

Abstract

Mutual funds are increasingly being chosen as an investment vehicle in Pakistan by those who lack the knowledge necessary to effectively manage their wealth and minimize associated tax obligations. Businesses purchase mutual funds to lower both their corporate and individual tax obligations. Investors purchase mutual funds to preserve their money's value against inflation and receive tax benefits. Mutual funds are essential to a nation's economic growth. Its running engagement is seen from the fixed income's predominant position as well as the overall monetary marketplaces. By actively participating in the stock market and promoting stability, mutual funds are a source of substantial funds through consistent consumption of floating stocks. In this study, the data is collected from 19 Sharia Compliant Equity (Absolute Return) Mutual Funds. The period is from 2016-2021. The data is collected from MUFAP (Mutual Funds Association ofPakistan) and the Fund managers’ reports from the Fund’s website. This study aims to examine the market timing of Sharia-based mutual funds in Pakistan using the multi-factor model to see which factors influence the performance ofFund manager and hence the overall fund. The regression results show that the Fund managers do not possess the ability ofMarket timing for Shariah complaint mutual funds in Pakistan.