Investing towards Shari’ah Compliant Public Equity Funds Products: Using Planned Behavior Theory (TPB)

Abstract

The purpose of this research is to investigate the intention of equity market investors to invest in Shari’ah compliant public equity funds in Malaysia. Public equity fund is an asset class where individuals or organizations can buy ownership in shares or stock of a company through a public market such as the Kuala Lumpur Stock Exchange or through the fund management companies. In the Malaysian capital market today, there exist two categories of public equity; one is the conventional equity fund and the other is the Shari’ah compliant equity fund or classified as Islamic equity funds. This study concerns with the Shari’ah compliant public equity funds and for purpose of this study, the term Shari’ah Compliant Public Equity Investment shall be used interchangeably with the Islamic Public Equity Investment as both express similar connotations, differentiating it from the conventional or non-Islamic based public equity investments. The phenomenal growth of the Islamic financial system globally has undoubtedly provided positive implications on the Islamic investment equity market. Shari’ah compliant public equity funds market despite being in the development stage is regarded as “one of the fastest growing sectors within the Islamic financial system Compared with less than ten (10) Shari’ah compliant equity funds in 1995, currently there are more than 500 Shari’ah compliant equity funds worldwide, with net asset value (NAV) more than USD1.5trillion and enjoying an average annual growth rate of between 12-15% from 2000 to 2018. Therefore, this study is based on the theoretical model known as Planned Behavior Theory (TPB) and its main objective is to explore the dimensions of TPB as its underpinning theoretical framework as both theories have been widely used by past researchers within the similar areas of research. This study will contribute to new strategies of promoting and marketing compliant Islamic capital market product. The findings of this study revealed contrary to popular believe and market expectation, it is proven that the expected rate of return to investment and risk appetite have not been the major criteria for investors choice in investing in Shariah compliant public equity fund in Malaysia.