Faith Based Investing (FBI) Fund Performance: Luck or Skill?

Praveen Das, S. P. Uma Rao


This study uses monthly net return data on 27 actively managed faith based mutual funds and the latest Fama-French bootstrap methodology to distinguish between luck and skill of fund managers. The main benchmark of this study is the Carhart (1997) four-factor model. The evidence suggests that majority of fund managers do not have enough skill to produce expected benchmark-adjusted net returns that cover costs. By ranking funds on performance after costs, we find that the performance of the majority of funds can be attributed to "bad skill". The evidence is strongest in the top 95th percentile and above, and from the bottom 10th percentile and below.

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International Journal of Financial Research
ISSN 1923-4023(Print)ISSN 1923-4031(Online)


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