Relationship between Macroeconomic Variables and Net Asset Value (NAV) of Islamic Equity Funds: Evidence from Pakistan

Abstract

Islamic equity funds witnessed high growth in portfolio size, performance, regulations and general acceptability in Pakistan; however it faces issues like insufficient understanding, trends in long term investments, etc. This study aims to investigate the long-run relationship between the chosen macroeconomic factors and the Net Asset Value (NAV) of Islamic Equity funds. This study is based on Vector Auto Regression (VAR) model over the period of ten years from 2005 to 2014. A long-run relationship is found among chosen macroeconomic variables and NAV of Islamic funds in Pakistan capital market.