Is “not-real” price lawful? The case of Islamic (sukuk) mutual funds in Indonesia during financial crisis

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Purpose – The purpose of this paper is to discuss some unique phenomena on Islamic fixed (sukuk) mutual fund price during financial global crisis in Indonesia. It aims to show that the sukuk mutual fund did not adopt the actual price of sukuk which may contradict Islamic teaching with regards to transparency and could cause investors to make wrong decisions. In addition the paper also aims to analyse correlation analysis, dependency of sukuk price to conventional bond and proposed recommendations. Design/methodology/approach – The study applies benchmarking graph analysis, Pearson correlation as well as Correlogram Granger Causality test and Response to Cholesky. To show that sukuk did not adopt the actual price, benchmarking analysis and correlation analysis were conducted as additional tools. Findings – The paper finds that the sukuk price movements were affected by the conventional bond and have a strong correlation, while the Islamic fixed mutual fund did not apply the actual price, which was unstabler. This has caused the fund to remain in a steadily increasing trend and stable; in addition, this has brought about good performance which actually did not show the real price. Practical implications – This research is practically of benefit because it helps to show the correlation of price movement in sukuk and conventional bond. Fund managers should be transparent in marking the real price and prudent in managing the liquid reserve of the sukuk mutual fund. Originality/value – This case may only occur in Indonesia as decreasing price of stocks and bonds in the USA has habitually caused the same to be seen as very expensive in some countries. Thus, bond price in Indonesia was affected significantly; this was actually caused by panic action. Foreign investors withdrew their funds because of liquidity and currency depreciation. On the other hand, an Islamic market that might be based on a conventional system was indirectly affected with benchmarking price problems. Sukuk mutual fund performance would look nice and stable as it did not adopt the actual price, this could mislead the performance analysis of the fund.

Original languageEnglish
Pages (from-to)163-177
Number of pages15
JournalJournal of Islamic Accounting and Business Research
Issue number2
Publication statusPublished - 21 Sept 2012


  • Financial risk
  • Indonesia
  • Islamic
  • Mutual fund
  • Price
  • Sukuk
  • Unit trusts


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