4. Theses

This dissertation discusses a number of issues in Islamic equity, which can be broadly defined as equity investments that meet certain Shari'ah compliance requirements. A particular stock is deemed as Shari'ah compliant when it "passes" a screening process which encapsulates a number of relevant Islamic principles, rules and tenets. This process, commonly termed Shari'ah stock screening, essentially involves the negative screening or filtering of stocks. While variations may exist from one jurisdiction to another, and between a number of different Islamic index providers ... Available in physical copy only (Call Number: t HG 4551 N336)

The meaning of investments is that you sacrifice something valueable now in order to gain benefit from it in the future. Timing of the investment is of great importance (McDonald & Siegel, 1986, p. 724). One could invest in real assets, i.e. land, buildings, machines, and knowledge which are used in order to produce future goods and services. Investments could also be made in financial assets, such as stocks and bonds, which do not contribute directly to production but are used as claim-holdings on real assets. There are three main types of financial assets: fixed-income or debt securities, derivative securities and equity. Thus, investments operate mainly in financial markets. The major players of the financial market are firms, which mostly raise funds; households, which mostly save; and governments, which may act as borrowers as well as lenders. Since corporations and governments do not sell the largest part of their securities directly to individuals, the role of financial intermediaries is of great importance. Between the security issuer and the ultimate security owner, in most of the cases, financial institutions such as mutual funds, pension funds, insurance companies and banks facilitate the process (Bodie et al., 2009, p. 1-33). One of the most common measures of stock and bond market performance is by indexes. Indexes are computed and published daily, providing investors possibilities to easily monitor performance of a particular equity (Bodie et al., 2009, p. 38). As globalization has spread international trade and cross border transactions have increased. Thus, daily information of the performance of indexes from all over the world has become a very important part of daily news for investors.

Since the recent financial crises, increases in contagion and correlation between assets have reduced the possibility of minimizing risk by way of diversification. The investors are therefore, looking for alternative assets such as, commodities, Islamic portfolios, etc. However, despite the very rapid growth of Islamic finance, there has hardly been any rigorous empirical research investigating the risk-return profiles of combining commodity portfolios with Islamic equities and/or with the mainstream equities. This study is aimed at filling this gap in the finance literature ...

This thesis is structured into three essays. The first essay provides evidence on the comparative risk-return profile and investment style of SCFs and the SRFs. As the long list of literature claims the superiority of these funds during the crisis period, the validity of this claim is also examined using a larger sample and a longer analysis period. The findings of this research can be summarized as follows; first, both types of funds underperform the market suggesting there is cost attached to ethical and religious based investment but SCFs, to some extent, manage to do better than the SRFs. Second, in terms of investment style, SRFs investments are biased towards small capitalized stocks whereas SCFs do not follow any specific strategy ...