Abstract:
Financial instruments have become a vital part of the financial institutions and markets of the present day world. Mutual fund is one such instrument that has emerged in the recent times and has demonstrated exceptional growth in the segments of both the conventional and Islamic funds throughout the world. This study examine the factors namely risk adjusted return, size of the fund, management charges and turnover of the fund with the growth of conventional and Islamic mutual funds operating in Pakistan. For this purpose, a sample size of71 mutual funds is considered which is sub-divided into 46 Conventional and 25 Islamic funds for a time period ranging from July 2010 to June 2016. The techniques applied on the data collected include Fixed Effect model, Cross Section Random Effects and Housman Test. It was found through the results that risk adjusted return, fund size and fund turnover are positively related to the growth of conventional mutual funds of Pakistan. In addition to that it was also noticed that as far as Islamic mutual funds are concerned fund size tends to exhibit a similar relationship as that of conventional funds however fund turnover display a negative relationship with the growth of Islamic mutual funds of Pakistan. The evidence from this study recommends that there exists a subtle and complicated association between management charges and the growth of both the conventional and Islamic mutual funds whereas risk adjusted return also failed to disclose any significant association with the Islamic mutual funds functioning in Pakistan. The results put forth that risk adjusted return, fund size and fund turnover are the determinants of growth of conventional mutual funds of Pakistan. However fund size and fund turnover turn out to be the determinants of growth of Islamic mutual funds of Pakistan.
