A Survey of Literature on Islamic Equity Style Investing and its Applications

Abstract

The study of equity style investing and its application to Islamic stock markets is limited but evolving. The need for analysis in this area is more pronounced as a result of investors and fund managers placing a greater level of importance on equity style investing. However, with the absence of Islamic equity style indices in many emerging markets, the analysis and further utilization of this investment strategy are impeded. Looking at the seminal papers by Sharpe (1992), as well as Fama and French (1992), which are the cornerstone of the idea and methodologies of equity style investing, this survey also traces the work contributed by scholars that have evolved along the way. Findings related to the literature seem to suggest that there are many areas that require further research, especially to explain the idiosyncratic nature of Islamic equity style investing