Macroeconomic Effects on Mutual Fund Performance within Changing Socioeconomic Challenges

This study examined how key macroeconomic indicators, such as the federal funds rate, inflation rate, real GDP growth rate, S&P 500 returns, DXY index returns, and major external shocks, affect the performance of U.S. equity mutual funds in the technology sector amid evolving socioeconomic challenges. Using multiple linear regression, the analysis evaluated the individual contributions and statistical significance of these variables in explaining variations in fund returns, particularly as technology-focused funds reacted to shifting macroeconomic conditions shaped by broader socioeconomic challenges. The dataset covered the period from 2012 to 2022, providing a comprehensive perspective on the interplay between macroeconomic conditions and fund performance over time during a decade characterized by substantial economic, geopolitical, and technological transitions and intensifying socioeconomic challenges. A sample of seven technology-focused U.S. equity mutual funds was selected based on thematic relevance, data availability, and heterogeneity in investment strategies, reflecting how different fund profiles respond to ongoing socioeconomic challenges. The results showed that the federal funds rate, S&P 500 returns, and external shocks exerted significant positive effects on fund performance, whereas the inflation rate, GDP growth rate, and DXY index returns had significant negative effects, patterns that became more pronounced under conditions shaped by socioeconomic challenges. The statistical significance of the model’s constant term further underscores the likelihood that additional, unobserved determinants, potentially linked to underlying socioeconomic challenges, influence mutual fund returns beyond those captured in the model. Overall, the study deepens understanding of how macroeconomic dynamics shape mutual funds’ performance within a sector particularly sensitive to global economic conditions, capital market fluctuations, and persistent socioeconomic challenges, offering practical insights for investors, fund managers, and policymakers. Nonetheless, the analysis is limited by constraints in data availability. Future research may benefit from expanding the set of explanatory variables, increasing the sample size and diversity of funds, exploring additional sectors and geographic regions, and integrating complementary qualitative methods to provide richer contextual interpretation of macro-financial relationships in light of ongoing socioeconomic challenges.