FACTORS AFFECTING THE PERFORMANCE OF SHARIA EQUITY FUNDS IN INDONESIA

Abstract

By the end of 2018, the net asset value in total and the number of Sharia mutual funds in Indonesia is dominated by the Sharia equity fund. Therefore, this study sought to address the factors of internal and external factors affecting the Sharia equity funds’ performance in Indonesia in the period 2010-2018. The fund performance is measured with the Sharpe ratio. The determinants of fund performance are investment manager’s Stock selection skill, Market timing ability, and Percentage change in asset under management as internal factors. In addition, the selected external factors are Inflation rate and Percentage change in exchange rate. This study adopted panel data analysis using secondary data of 8 selected samples of Sharia equity funds. The results revealed that investment manager’s Stock selection skill, Percentage change in asset under management, and Inflation rate positively and significantly affect performance of Sharia equity funds. On the other hand, investment manager’s Market timing ability insignificantly affects Sharia equity fund performance. While, Percentage change in exchange rate negatively and significantly affects Sharia Equity Funds Performance.