The better timer of Volatility and Style: Shariah-Compliant Mutual Funds or Conventional Mutual Funds.

The active fund managers use market inefficiencies aiming to give maximum returns and minimal risks by practicing their timing abilities. Therefore, this study analyzes the timing abilities of Shariah-compliant funds by making a comparative analysis with conventional funds. Using Shariah-compliant equity funds and conventional equity funds of Pakistan, for the period 2012 to 2020, this study investigates the volatility timing abilities and style timing abilities of mutual funds. The literature does not cover any study investigating volatility timing ability for Shariah-compliant funds. Additionally, this research study examines the style timing ability for Shariah-compliant funds widely neglected for Shariah-compliant funds. Furthermore, these timing skills are not analyzed using daily return data of Shariah-compliant funds. The results conclude that conventional funds are a better timer of market volatility. However, style timing abilities are not evident for both types of funds confirming that fund managers lack the ability to time investment style. This study suggests that the fund managers incorporate the timing abilities to reduce the risk faced by the funds and therefore, can enhance the growth of the funds. [ABSTRACT FROM AUTHOR]