Economics and Finance Review Vol. 2(3) pp.

16 25, May, 2012 ISSN: 2047 - 0401

Available online at http://www.businessjournalz.org/efr

Performance of Islamic Mutual Funds in Pakistan

Nasir Razzaq
Faculty of Administrative Sciences Air University Islamabad, Pakistan
E-mail: master_nasir18@yahoo.com

Sajid Gul1 (Corresponding Author)

Faculty of Administrative Sciences Air University Islamabad, Pakistan
Mardan 23200 KPK, Pakistan
E-mail: sajidali10@hotmail.com

Muhammad Sajid
Faculty of Administrative Sciences Air University Islamabad, Pakistan
E-mail: chsajid_24@yahoo.com

Sumra Mughal
MS Scholar Air University Islamabad, Pakistan
Email:sumra.ansar@yahoo.com

Syeda Asma Bukhari

MS Scholar Air University Islamabad, Pakistan
E-mail: syedaasmabukhari@ymail.com

ABSTRACT

The paper investigates 9 Islamic mutual funds that are managed by different funds managers of Pakistan. We have
examined that returns of funds are according to their level of risk. The study also investigated the performance and
ability of funds managers by the help of different models, such as sharp ratio, Trenyor ratio, Jensens Alpha and
information ratio. First returns are calculated than ratios are estimated, where the results represent that Islamic
funds have significant growth in previous years which indicate that in Pakistan Islamic funds are growing and
investor are attracted by these funds. To check the performance of Islamic mutual funds we have first calculate the
average monthly returns, net asset value and market index value. The findings that are achieved from the function of
models on data are used to estimate the performance of speedily growing Pakistani Islamic Mutual Funds industry.

Keywords: Islamic Mutual Fund, Sharp ratio, Jenson Alpha, Trenyor ratio.

1. INTRODUCTION
In broad, mutual funds are investment that financial resources of individuals and organizations invest in tradable
financial securities. They are an idyllic option for small investors seeking liquidity, portfolio diversification, and
investment expertise. However, investment objectives of investors differ in terms of return requirements, risk
patience, liquidity requirements, as well as religious and moral conformity. Scholastic studies on Islamic mutual funds
are limited. Most of earlier researches are conducted through orientation to a conventional market, and Islamic funds
investigated according to the Islamic regulations and obligations. .

1
Corresponding author, Sajid Gul. E-mail: sajidali10@hotmail.com , Address: Mardan (KPK) Pakistan.

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In Islamic mutual funds the funds managers defines that, the funds are concerned and governed by the Shariah
advisory, who offered investments according to Quran and Sunnah principles. These funds also contains different
levels of risks and returns, depends on the investors choice. The Islamic funds also have diversification ability. The
Islamic funds prohibited (riba), betting (maisir), ambiguity (gharar), all investments and businesses which are not
according to principles of Shariah and all forbidden actions for instance alcohol making, laying a bet, pornography
etc. as well as investing in interest (riba)-based financial. Different partnerships are being developed in different
types of investments according to risk and returns that can be distributed among investors. In Islamic funds the
principles of Shariahs prohibited riba (interest) and Fiqhi (Islamic Jurisprudence) matters in the account of gharar
(excessive risk) recommended different financial instruments, they are offered conventional funds List of Securities
Approved by Shariah Advisory Council of the Securities Commission, 26 October 2001.

Islam is a religion that unite together religious and chronological aspect of living. It regulates not only a persons
affiliation with God and also human being associations in societal and monetary settings. Therefore, the Sharia is
an element of each Muslims civilizing, societal and behavioral individuality the submission of Sharia to investment
choices and administration is not a new trend. Previously Muslims were capable to set up an interest-free financial
structure for mobilizing resources to finance productive tricks and user requirements, which had worked efficiently
for centuries. As Muslim societies became more refined, and their financing requirements more multifarious coupled
with stagnating Islamic idea progression, the Islamic-based financial structure was progressively replaced by the
interest-based system in modern period. The existing growing need of Muslims to fetch their present economic and
financial action to conform again with their cherished religious ethics and values, has lead to an upward interest in
Islamic-approved Investment vehicles.

Equity funds are concerned with capital laws but Islamic equity funds are not concerned by capital laws. A current
learning by Fikriyah Abdullah, Taufiq Hassan, Shamsher (2001) compared Malaysian Islamic Unit Trust Funds
performance with conventional mutual funds. According to Malaysian market the performance of Islamic funds are
better in the recession period as compared to conventional mutual funds. Conventional mutual funds are better in
boom period as compared to Islamic funds.

The aim of this research is to investigate Islamic Mutual funds performance in Pakistan. In this context to measure
the performance of mutual funds, we have been using four ratios which are Sharpe ratio, Treynor ratio, Jensen Alpha
ratio and Information Ratio. Additionally, these ratios were also evaluated the risk and return of the Islamic mutual
funds. The main objective is to find out that which mutual fund is performing better between Islamic mutual funds
because Islamic mutual funds concerned with Quran & Shariah, Laws. In unfavorable market situation, Islamic
Mutual Funds have the ability to diversify and also protect the investors who invest in conventional mutual funds
comparatively. In last few years Islamic mutual funds market attract local as well as international investors to invest
in various Islamic mutual funds. In Pakistan the body that governed is KMI 30 index which is also known as Islamic
Index. These types of index have a substantial growth and need to address the market in a purely management level.

1.2 The Fundamentals of Islamic Mutual Funds

Islamic and conventional mutual funds have comparable properties in many means: though, distinct its
conventional complement, Islamic mutual fund have to be traditional according to the Sharia (Islamic law)
investment principle. The Islamic law support the use of profit distribution as well as partnership format in addition
to prohibits riba (interest), maysir (gambling and pure games of chance), and gharar (selling something that is
not owned or that cannot be described in accurate detail; i.e., in terms of type, size, and amount) El-Gamal (2000).
The Sharia rule and code administrate a number of characteristic of an Islamic mutual fund, as well as its asset
portion (portfolio screening), investment and buy and sell put into practice, and revenue sharing (cleansing).

Islamic mutual fund investment can be done after the screening of the funds and these funds should follow the rules
and regulation according to Islamic law. At the time of screening out the fund Qualitative approach should follow
because it will explain you the type of business that the fund have (e.g., any industry involving in business to
manufacture and promoting alcohol etc), or else securities with the intention of grip lone of the Sharia forbidden
component (e.g., involving riba, maysir or gharar) the same as make clear previously, or otherwise corporation with
the intention of carry out immoral dealing put into practice as far as Sharia is concerned. Therefore, expelled from
the business that are Islamic-approved securities are unchanging revenue tools like the corporate bonds, treasury
bonds as well as treasury bills, certificates of deposit (CDs), preferred stocks and warrants etc. further, trade is not

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allowed in Islamic funds on margin, or they also not to utilize to getting interest-paying debt for financing. Islamic
funds also not allowed involving in buy and sell contracts.

An Islamic fund can only operate if they are according to Islamic compliant basis, Islamic fund should be invested
in interest free debt. You can hedge, arbitrage and leveraged the fund in conventional funds but in Islamic law it is
forbidden for Muslims to hedge, arbitrage and leveraged and not allowed any type of sale and repurchase of
contracts. Fund managers of conventional fund speculate the funds but in Islamic funds mangers are restricted to
speculate. Risk in Islamic economic can be expected to assume risk after making a proper assessment of risk
with the assistant of proper information. If there is no such information or absence of knowledge than risk or
uncertainty is speculation it is wrong according to Islamic rules.

In this case few scholars permit investment in stock allowable (i.e., held in reserve at a least percentage) quantity of
interest earnings or else by means of tolerable incomes commencing improper dealing actions but the entire
impure returns is cleansed than donate it. Purification of capital gain, though, leftovers controversial because
a few scholars disagree on this and is not essential as to adjust in the stock value does not actually be a sign of
interest, at the same time as others propose with the purpose of it is safer as well as supplementary reasonable to
cleanse returns through as of put in to sell the shares seeing that well Usmani ( 2002). Purification procedure is
completed whichever by the fund administrator earlier than any allocation of earnings, or else via coverage the
essential financial percentage for sponsor to cleanse their income scheduled their individual.

Zakah cleansing the income, In Zakah there is nisab or percentage of beyond a smallest sum held at leisure for
one lunar year with the rate of 2.5 percent on financial wealth and earned earnings. Al-Qaradawi (1999). Zakah
computation lying on investment earnings, though, is at rest divisive DeLorenzo (2000).

2. REVIEW OF LITERATURE
Many academic writers are paying attention to the Mutual funds, as of their reputation and as well as the profit
they offer to investors. T he typ e o f Mutual Fund s markets provides diversified investment opportunity in
capital and as well as the fixed proportionate of income market (Gruber, 1996). Many suggestions are
made a variety of procedure to estimate the mutual fund performance mainly worked covered by the Sharpe (1966),
Treynor (1965) and Jensen (1967). Performance evaluation is the most studied topic in Mutual Funds for the
reason that of trillions of dollars investment caught up in them Haslem ( 2008). And these models
recommended the base of prospect models. While these mutual fund performance measures models are discussed in
a variety of level. However, all these have there some advantages and disadvantages (Grinblatt & Titman, 1993 and
Fama, 1972).

Hussein (2004) study the performance of FTSE Global Islamic index with comparison with FTSE All-World Index
and found that the performance of Islamic index is performing significantly different from others fund index in the
time phase of 1996 to 2003. Performance of risk-adjusted shown that there is similar performance in Islamic and
other funds as well. When the market was showing bulling trend at that period the return was abnormal of Islamic
index and the relationship was significantly positive. Its also shown that there is no adversely impact on the
performance of Islamic index. Girard and Hassan (2005) also study the performance of comparatively Dow Jones
Islamic index with other conventional index. Carhart (1997) found the consistent performance by using the above
discussed models and also examined the co-integration of Islamic index against conventional fund index. They
used the sample period of 1996 to 2005.

According to the recent studies it is shown that the performance of Islamic index has the blend results in Malaysia.
In previous studies researches took into place all types of funds in which balanced, bond, fixed income fund as well
to examine the performance of these funds index. Also in present studies 54% of the Malaysian funds took in to part
to test the performance of these indices by the help of well-known models like Sharpe (1966), Treynor (1965) and
Jensen (1968). Its also shown by current studies according to risk and return analysis of Islamic equity index
compared with KLSI Islamic index.

In Pakistan there are two recent studies relevant to the performance of mutual funds by Shah and Hijazi (2005)
and Sipra (2006). Shah and Hijazi (2005) evaluate the 14 portfolio of mutual funds from 1997 - 2004 later than
alter for survivorship bias. They used three models to check the performance of mutual funds known as Sharpe,

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Treynor and Jensens alpha. They explained that mutual fund market performs sound and the funds that are
average, these funds outer performed the benchmark index like KSE-100 index. They explained that the funds that
are average there performance is better according to the three given models than benchmark index, However, other
few o f funds underperformed. Shah & Hijazi (2005) explained that while the industry of mutual fund is
relatively young, they were not capable to smash the fu nd market by means of higher returns, however in the
sense of protective policy, according to their potential they did well and added the value in their assets. Sipra
(2006) analyze the Pakistani funds market in different times firstly from 1995 to 2004 and secondly from 2000 to
2004 by using 33 mutual funds. Sipras (2006) outcomes were different from Shah and Hijazi (2005). Sipra
studies outcome show s m all correlation linking w i t h the f u n d market portfolio showing that funds
performance is not well of diversification. After the analysis by the help of Sharpe measure exposed that only one
fund performed well in the market in the phase of five years. Although, in the view of Treynors ranking only few
of them performed better in the market portfolio in the phase of five and ten year. At last the Jensens measure
shows that about 15 percent of the fund shows positive alpha in the given time, presenting deficit performance of
funds. Importantly Sipra (2006) explained that funds performed better in opening five years but after that there
performance is below the par.

3. RESEARCH METHODOLOGY
In this research, the analysis is based on the performance of open-ended funds. The tactic that is applied to estimate
the funds performance is entirely quantitative and the sample that is studied using four pioneering portfolio
performance models namely Sharpe ratio, Treynor index, Jensens alpha and information ratio all are based on
Capital Asset Pricing Model and its assumptions. These four models have been used by many previous studies based
on mutual fund all over the world. Beside the variations (e.g. Panwar & Madhumati, 2006; Haslem et al, 2008, etc),
in this study very basic model proposed by Sharpe (1966) is used, Treynor (1965), Jensen (1967) and information
ratio in that order and also used correlation analysis of portfolio return of Islamic mutual funds on market index. To
calculate the ratios for the purpose to check the performance of Islamic mutual funds we calculate the average
monthly returns, net asset Value and market index value.

3.1 Sources of Data

Data is collected from the mutual funds annual reports for the phase of two years on daily basis from 2009 to 2010.
We used different sources like Fund Management Companies of Islamic, Stock exchanges and internet. Treasury
bills rate was gathered from Statistical Bulletins provided by State Bank of Pakistan.

3.2 Variables
For the performance analysis of Islamic mutual funds we used different variables in which we include; tax deductive
net income, daily net asset value (NAV) for two years, monthly returns of KSE 100 index for two years, Six months
Treasury bills rate for the purpose to find out Risk free rate, also calculate daily returns and beta.

3.3 Measuring Return

The daily returns for the analysis calculated by the help of following equation (Milonas 1995):

Where,

= Daily mutual fund return in the period

= Daily mutual fund net asset value per unit in the period
= Dividend of the mutual fund in the period
= Daily mutual fund net asset value per unit in the period

After calculation of returns, average returns calculated as following:

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3.4 Measuring Risk

Risk, on the other hand was measured based on the standard deviation of the weekly returns which was
calculated using the following formula:

Where,
= Standard deviation of the mutual fund.
= Number of weekly returns.
= Daily returns of the mutual fund.
= Mean return of the mutual fund.

The total risk mutual fund convey by coefficient of variation per unit of returns of the mutual funds. The formula of
coefficient of variation defined below.

Where,

= Standard deviation (the total risk) of the mutual fund

= Average (Mean) return of the mutual fund
To calculate systematic risk, it is important to calculate beta coefficient, for this purpose we used capital asset
pricing model also known as (CAPM) which is initially used by (Elton and Gruber 1995). Hence, the beta is
calculated using this below given model.

Rpt - Rft = p + p (Rmt Rf).(1)

Where,
Rpt = Rate of return of the portfolio at time t.
Rft = Risk free rate (6 months T-bill rate)
= the intercept of the model, it is estimated using OLS regression analysis
= Portfolio beta or the market risk being estimated using OLS regression analysis.
Rmt= the average return on the market index.
pt = the error term with zero mean.

3.5 Sharpe Model

This ratio is used to calculate the risk of excess return per unit or we can also say that, it measures the total risk of
the fund portfolio to estimate the excess return to volatility (volatility being the standard deviation of the returns),
for the purpose to find out the risk/ return of the funds. We also calculate the ratio of the past returns in surplus of
the risk free rate to the standard deviation of the fund portfolio returns. By the help of this we can decide which
portfolio present the large amount of risk and return. On behalf of this the investor decides which fund portfolio
offers the best returns according to risk for investment. By the help of average returns of the portfolio employ
Sharpe ratio to calculate ex-post portfolio act. We used T-bill rate to find out risk free rate and standard deviation
shows the mutual fund portfolio total risk in the chosen time period. If the sharp ratio is showing negative value than
it will not be calculate. The sharp ratio is capable to find out the ability of the funds managers by the help of returns
and diversification of the fund portfolio. The model of sharp ratio is given below,

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Where,
= Average return on the portfolio (mutual fund) over the evaluation period.

= Average risk-free return over the evaluation period (Treasury bills return).
= Standard deviation (total risk) of the mutual fund.

3.6 Treynor Model

We used Treynor model to find out the return per unit of risk or systematic risk of the fund portfolio. According to
this purpose if mutual funds give the higher return will be better to invest as compared to the mutual fund that
provide lower return according to their risk. It also measure the ability of funds manager either they do well or not.
If the Treynor ratio is higher than the performance of the fund portfolio will be higher and also high beta represents
the higher risk. Its also described the Treynor ratio will be chosen by investors those operating vastly diversified
portfolios. Mutual fund investments are the large amount of investments must observe the unsystematic risk spread
absent.

Where,

= Average return on the portfolio (mutual fund) over the evaluation period

= Average risk-free return over the evaluation period (Treasury bills return)

= Beta of the mutual fund over the evaluation period

3.7 Jensen Alpha Model

Jensen (1969) set up alpha () in the capital asset pricing model to calculate the irregular return of funds portfolio, to
facilitate dissimilarity involving in the actual average return make by the fund portfolio and also the return to
facilitate earned by the fund portfolio set the market circumstances and the risk of the fund portfolio. Jensen measure
is estimate as follows:

Where,

= the risk free return.

= the return on the market return.

= the error term.

and = are the parameter of the model.

= the error term.

and = are the parameter of the model.

3.8 Information Model

This ratio is used to determine the single number the mean and variance properties of the dynamic fund portfolio. It
is similar with the sharp ratio only information does not contain the risk free rate. This ratio worked on past data, it

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is calculated simply the excess return divide by standard deviation. Information ratio described that, what is excess
return on the benchmark that can be getting for each extra unit of residual risk. Hence, it also capable to compute
how greatly worth is added or shattered by the manager of mutual fund. By the help of information ratio its also
conclude that what extra return has achieved by the fund manager according to the proportion of risk. The
information given as follows.

Where,
ER = the excess return.

= the standard deviation.

4. RESULTS AND DISCUSSION

Four models have been used to estimate the performance of Islamic mutual funds. In table one calculations of
Average returns, Sharp Value, and standard deviation has been calculated. In table 2, we discussed the Treynor
model, Table 3 includes the Jensen Alpha and in Table 4 Information ration has been calculated. Tables and results
are discussed below.

Table: 1

Average Return Standard SD rank Sharp Sharpes

Islamic Mutual Funds
return rank Deviation Ratio rank
Meezan Islamic Income Fund 0.0054 3 0.00220 8 0.4321 3
Alfalha GHP Islamic Fund -0.0026 9 0.00270 6 -0.1221 6
Atlas Islamic Fund 0.0043 4 0.0035 4 -0.1472 7
8 5 5
IGI Islamic Income Fund 0.3234
-0.0025 0.00271
NAFA Islamic Income Fund 0.0009 6 0.0010 9 0.4232 4
United Composite Islamic 5 7 2
0.0036 0.00221 0.5628
Fund
Dawood Islamic Income Fund 0.0344 1 0.0140 2 -0.2981 9
JS Islamic Fund 0.0159 2 0.3233 1 -0.2861 8
7 3 1
Kasb Islamic Income Fund 0.6743
-0.0015 0.0069
0.0064 0.0398 0.1736
Overall performance

Sharp ratio described the performance of managers ability of diversification. In Table 1, we can see that, some
funds showing negative results but the overall performance is positive. Looking at the sharp ratios it can be seen that
the overall performance value of Islamic mutual fund is 0.1736 whereas, of KASB Islamic income fund has the
highest performance value which is 0.6743, which means that the ability of their managers to diversified mutual
funds is better.

The average returns of Islamic mutual fund value are 0.0064 whereas; Dawood Islamic income fund has the highest
average return 0.0344. Standard deviation shows the risk on daily returns, the overall performance according to risk
of Islamic mutual funds is 0.0398. NAFA Islamic income fund has the lowest risk with a standard deviation of
0.0010, which indicate that NAFA Islamic funds risk is low according to daily returns.

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Table: 2

Return Trenyor Trenyors Beta

Islamic Mutual Funds Average return rank Ratio rank
Meezan Islamic Income Fund 3 0.231 4 0.67
0.0054
Alfalha GHP Islamic Fund 9 0.0234 6 0.81
-0.0026
Atlas Islamic Fund 4 0.0567 7 0.53
0.0043
IGI Islamic Income Fund -0.0025 8 0.2564 2 0.89

NAFA Islamic Income Fund 6 0.2347 3 0.68

0.0009
United Composite Islamic Fund 5 0.2894 1 0.39
0.0036
Dawood Islamic Income Fund 1 0.1325 8 0.65
0.0344
JS Islamic Fund 2 0.0957 5 0.58
0.0159
Kasb Islamic Income Fund -0.0015 7 0.9003 9 0.32

0.0064 0,2214
Overall performance 0.6133

Treynor Ratio point out to facilitate the portfolio contribution the highest reward/risk (systemic risk) determined the
merely risky portfolio into which investors motivation desire to invest. The s t a t e m e n t i s to facilitate t h e
p o r t fo l i o manager to spread a w a y t h e diversifiable risk and for investors point of view the most important
thing is systematic risk as a substitute of total risk. Ratio i s c a l c u l a t e d o n the past returns in intemperance
of the risk-free rate (T-Bill rate) to the systemic risk. Results show (Table 2) that all funds have beta less than 1,
in some cases significantly less than 1, regarding systemic risk we can conclude that all mutual funds are
defensive in their movement of returns as compared to the market returns (KSE 100 index). Treynor
ratio o n o v e r a l l basis/industry is 0 .1 3 . As far as Dawood Islamic is concerned it has a moderate Beta of 0.65,
and the return of Dawood is also moderate, which shows that in the period of 2009 to 2010 the moderate funds
have the better results because of financial crunch in the market. Investor did not invest in the more risky funds
and also did not invest in the lower risk because the return is also low.

Table: 3

Return
Islamic Mutual Funds Average return Rank Alpha
Meezan Islamic Income Fund 3
0.0054 8.34
Alfalha GHP Islamic Fund 9
-0.0026 -11.66
Atlas Islamic Fund 4
0.0043 -5.87
IGI Islamic Income Fund -0.0025 8
3.98
NAFA Islamic Income Fund 6
0.0009 6.77
United Composite Islamic Fund 5
0.0036 9.23
Dawood Islamic Income Fund 1
0.0344 -10.32
JS Islamic Fund 2
0.0159 2.33
Kasb Islamic Income Fund -0.0015 7
-31.44
Overall performance 0.0064 -3.1822

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According to Table 3 the Alpha overall performance value of Islamic mutual funds showed negative results of -
3.1822, this determined that the Islamic mutual funds underperformed. Although, some of Islamic funds have
positive value but the overall performance have a negative value. Jensen model calculate the irregular return of
funds portfolio, to facilitate dissimilarity involving in the actual average return make by the fund portfolio and also
the return to facilitate earned by the fund portfolio set the market circumstances and the risk of the fund portfolio. If
we see in Islamic mutual funds the united funds has a high value which is showing that it has irregular returns. In
mutual fund the customer wants consistent performance, so which ever has the less value of irregular results and
have the consistent performance are the valuable for the investor. Its shows the riskiness of the fund, because the
irregular results indicate the risk and the lack of knowledge that the fund manager have. In this industry the proper
knowledge is very important for future consideration.

Table: 4

Return rank Information

Islamic Mutual Funds Average return Information Ratio rank
Meezan Islamic Income Fund 3 3
0.0054 0.5913
Alfalha GHP Islamic Fund 9 9
-0.0026 -0.4778
Atlas Islamic Fund 4 8
0.0043 -0.3642
IGI Islamic Income Fund -0.0025 8 4
0.4783
NAFA Islamic Income Fund 6 1
0.0009 1.3145
United Composite Islamic Fund 5 2
0.0036 0.5960
Dawood Islamic Income Fund 1 7
0.0344 -0.0912
JS Islamic Fund 2 6
0.0159 -0.0035
Kasb Islamic Income Fund -0.0015 7 5
0.1852
Overall performance 0.0064 0.2476

The result of Table 4 determined the performance of funds according to information ratio. The main purpose of
information ratio is to determine that what excess return on every entire unit of risk is. If we conclude overall
performance value of Islamic mutual funds is 0.2476, which indicate the excess return of per unit of risk. NAFA
Islamic fund has the highest value which is 1.3145. So, the performances of Islamic funds are better in respect of
information ratio. This ratio is used to determine the single number the mean and variance properties of the dynamic
fund portfolio. It is similar with the sharp ratio only information doesnt contain the risk free rate. This ratio worked
on past data, it is calculated simply the excess return divide by standard deviation. Information ratio described that,
what is excess return on the benchmark that can be getting for each extra unit of residual risk. Hence, it also capable
to compute how greatly worth is added or shattered by the manager of mutual fund. By the help of information ratio
its also conclude that what extra return has achieved by the fund manager according to the proportion of risk.

5.1 CONCLUSION
This paper investigate 9 Islamic mutual funds that managed by different funds managers of Pakistan. The study
examined that returns of funds are according to their level of risk. We have also investigated the performance and
ability of funds managers by the help of different models, such as sharp ratio, Trenyor ratio, Jensens Alpha and
information ratio. First returns are calculated than ratios are estimated, where the results represent that Islamic funds
have significant growth in previous years which indicate that in Pakistan Islamic funds are growing and investor are
attracted by these funds. To check the performance of Islamic mutual funds we have first calculate the average
monthly returns, net asset value and market index value. The findings that are achieved from the function of models
on data are used to estimate the performance of speedily growing Pakistani Islamic Mutual Funds industry.

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In mutual fund industry, future information and forecasting is very important and only funds managers can achieved
this forecasting through their ability. Only those Mutual funds also considered well, that are most diversified. In this
research the conclusion is that the diversification ability of Islamic mutual funds portfolio is attractive.

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