The Influence of Economic Variables on Mutual Fund Performance: A Comparative Analysis Between Developed and Emerging Markets
Abstract
This research investigates the influence of economic factors on mutual fund performance, focusing on a comparative analysis between developed and emerging markets. Economic indicators, including GDP growth, inflation, interest rates, and exchange rates, are examined to understand their correlation with mutual fund returns. The study spans from 2015 to 2023, analyzing mutual funds from developed markets (United States, Germany, Japan) and emerging markets (Brazil, India, South Africa). Using econometric models, the research assesses the relationships between macroeconomic factors and mutual fund performance across different market contexts. Results indicate that economic variables significantly impact mutual fund returns, with stronger correlations observed in developed markets. Specifically, GDP growth is positively correlated with mutual fund returns in developed markets, while inflation negatively affects returns in both developed and emerging markets. Interest rates show an inverse relationship with mutual fund performance, consistent across all markets, while exchange rate fluctuations have a greater impact on emerging markets due to their higher volatility. The study further reveals that economic factors account for a larger proportion of mutual fund returns in developed markets, which are more stable and predictable. In contrast, the impact of economic factors in emerging markets is less pronounced, influenced by political instability and external shocks. The findings provide valuable insights for investors, fund managers, and policymakers, emphasizing the importance of understanding macroeconomic conditions when making investment decisions. This research contributes to the growing body of literature on the role of economic factors in financial markets, especially in the context of differing market maturity levels.
How to Cite
Arvind Dadhich, "The Influence of Economic Variables on Mutual Fund Performance: A Comparative Analysis Between Developed and Emerging Markets", Vol. 3, Issue 4, 25-07-2025, pp. 76-89.
