Examining the Influence of Macroeconomic Variables on Mutual Fund Returns: A Comparative Study of Developed and Emerging Markets
Abstract
; This study investigates the influence of macroeconomic factors—GDP growth, inflation, interest rates, and exchange rates—on mutual fund returns in developed and emerging markets. By analyzing data from 2015 to 2023, the research employs multiple regression models to compare how these economic indicators affect mutual fund performance in the United States, Germany, and Japan (developed markets) versus Brazil, India, and South Africa (emerging markets). The results show that GDP growth has a more pronounced positive impact on mutual fund returns in developed markets, while inflation has a significantly stronger negative effect in emerging markets. Interest rates exhibit an inverse relationship with mutual fund performance in both categories, but the effect is more substantial in emerging markets due to greater volatility. Exchange rates have a notable impact, particularly in emerging markets, where currency fluctuations are more unpredictable. The study finds that macroeconomic factors explain a larger proportion of mutual fund returns in developed markets (R² = 0.756) compared to emerging markets (R² = 0.632), suggesting that economic conditions in developed economies are more stable and predictable. This paper provides valuable insights for fund managers and investors, emphasizing the need for tailored investment strategies based on the economic context of the market. The findings also have implications for policymakers aiming to stabilize financial markets in emerging economies to improve mutual fund performance.
How to Cite
Arvind Dadhich, "Examining the Influence of Macroeconomic Variables on Mutual Fund Returns: A Comparative Study of Developed and Emerging Markets", Vol. 3, Issue 5, 21-08-2025, pp. 74-81.
