Mutual fund selection criteria: evidence from Malaysia

Abstract

Purpose - Under its \u22Members Investment Scheme\u22 strategic initiative, the Malaysian Employees Provident Fund (EPF) permits its members to invest part of their retirement savings in approved external funds. Given there is an increasing number of unit trust funds available in the market, it is not an easy task for members to make this investment choice decision. The purpose of this paper is to explore the perceived importance of fund selection criteria within the context of retirement savings in Malaysia. In addition, it also seeks to examine whether there is a relationship between religious affiliation and choice of fund. Design/methodology/approach - A questionnaire-survey was carried out among 440 individual EPF members. Findings - The survey results show that the ranking of mutual fund selection criteria differs between Muslim and non-Muslim members. Past performance was the most important criterion valued by the non-Muslim EPF members. In line with conforming to religious belief, the fund\u27s commitment to Islamic principles was the most important criterion considered by Muslim EPF members. Both type of religious group members also considered the overall reputation of the fund as important criterion in selecting a mutual fund. Research limitations/implications - The paper is subject to the normal limitations associated with survey research. Practical implications - The findings of this study can help fund management companies to better promote their funds to the right investors. Originality/value - The paper provides empirical evidence regarding mutual fund selection criteria from the perspectives of individual investors

Adoption of financial technology (Fintech) in mutual fund/ unit trust investment among Malaysians: unified theory of acceptance and use of technology (UTAUT).

“…Similarly, there is no significant relationship between gender with performance expectancy, effort expectancy, social influence and facilitating conditions. The findings in mutual fund selection criteria exhibit that performance variable was still the main criterion among investors (11).…”

Retirement savings investment decisions: evidence from Malaysia

“…Results and discussion 4.1. Respondents' profiles À EPF members Jamaludin, Smith, and Gerrans (2012) noted that the sample was marginally overweight in Malay respondents relative to the overall Malaysian population (78.2 versus 65 per cent in the Malaysian population). The three dominant religious affiliations of respondents was Islam (78.6%), Buddhism (12.7%) and Hinduism (7.3%).…”

“…The sample has been previously described in Jamaludin, Smith, and Gerrans (2012) who investigated the selection criteria reported by EPF members when selecting mutual funds. The sample constructed was representative of EPF membership with a range of occupations drawn from six large organisations.…”

Towards Developing a Conceptual Framework for Islamic Unit Trust Funds

“…Marketing Islamic unit trusts could gain the confidence of investors (Elfakhani et al, 2007), especially if potential investors are given information as to how a fund is managed, how investments are selected, and how fee and remuneration are structured (Lewis, 2010). In addition to that, a number of empirical studies have indicated that religion (Jamaludin et al, 2012), return expectation (Alam et al, 2016), risk tolerance (Jamaludin and Gerrans, 2015) and past performance (Jamaludin et al, 2012) affect investment decisions. These studies showed that attributes other than risk and return are valued by investors.…”

“…In Malaysia, the Islamic unit trust industry is supported by the government, which is evidenced in several initiatives such as the establishment of Kuala Lumpur Shariah Index (Abdullah et al, 2007), tax exemption (Mohammed Kamil et al, 2018) and the liberalisation of overseas investment rules (Jamaludin, et al, 2012;). Islamic fund management companies are allowed to be initiated with 100% foreign ownership which is an additional attraction to global investors (Jamaludin, et al, 2012). This can be seen as an effort by the Malaysian government in pushing Malaysia as the global Islamic Capital Market hub.…”