Does the Covid-19 pandemic affect faith-based investments? Evidence from global sectoral indices

In this paper, we aim to investigate the influence of the Covid-19 on the behavior of the S&P 1200 Shariah and non-Shariah sectoral indices over the period from 1st October 2010 to 29th October 2020. We contribute to the global literature by examining the financial impact of the Covid-19 on the Shariah and non-Shariah sectoral indices. We find that the S&P 1200 Shariah Communication, consumer staples, financials, healthcare, industrials, IT, materials, and utility sectors earn higher average returns than their counterpart sectoral indices during the Covid-19 period. The study reports that on average, the volatility of the Shariah indices is less than their counterpart indices. Moreover, we further document that on average the S&P Shariah sectoral indices offer a higher return with low risk even during the Covid-19 global pandemic. We suggest that ethical investments are the best alternatives to retail, institutional, and foreign investors.

Automated summary

The study investigates the impact of Covid-19 on the behavior of S&P 1200 Shariah and non-Shariah sectoral indices, finding that Shariah sectoral indices in various sectors earned higher average returns with lower volatility during the pandemic. It suggests that ethical investments are the optimal choice for retail, institutional, and foreign investors.