S

Effects of Macro-Economic Factors on the Financial Performance of Mutual Funds in Kenya

Show simple item record

dc.contributor.author Lemantile, Allan Leyian
dc.date.accessioned 2017-11-16T07:58:26Z
dc.date.available 2017-11-16T07:58:26Z
dc.date.issued 2017
dc.identifier.uri http://erepo.usiu.ac.ke/11732/3466
dc.description A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree Masters in Business Administration (MBA) en_US
dc.description.abstract The general objective of this study was to examine the Macro-Economic factors affecting the financial performance of mutual funds in Kenya. Specifically, the study sought to determine how interest rate affect performance of mutual funds in Kenya, to investigate how exchange rate affect performance of mutual funds in Kenya and to examine how inflation, affect performance of mutual funds in Kenya. This study reviews literature, on macro-economic and micro-economic factors affecting the performance mutual funds in Kenya. In specific, the chapter has reviewed how interest rate, exchange rate and inflation affect mutual funds. The research problem was studied through descriptive survey design. The target population of the study was Mutual funds registered in Kenya by CMA. The period of the study was 2011 and 2016. This research utilized secondary data from seven mutual funds and the data was chosen because they are readily available than primary data. Secondary data was collected from the mutual funds’ annual reports. The data collected was analyzed using regression and correlation analysis. Data analysis was done using SPSS Version 24 To analyze the first objective, the study sought to establish the effect of interest rates on mutual funds and the findings revealed that there was a positive relationship between interest rate and performance of mutual funds. On the other hand, the findings revealed a positive and significant relationship between performance of mutual funds and interest rates. To analyze the second objective, the study sought to establish the effect of exchange rates on mutual funds and the findings revealed that there was a negative relationship between exchange rate and performance of mutual funds and a correlation analysis done revealed that there was a negative relationship between performance of mutual funds and exchange rates. To analyze the third objective, the study sought to establish the effect of inflation rates on mutual funds and the findings revealed that there was a negative relationship between exchange rate and performance of mutual funds and A correlation analysis done to establish the nature of the relationship between performance of mutual funds and inflation rates and the study revealed a negative correlation. A regression analysis was done to establish the nature of the relationship between the variables and the findings revealed the R squared value was 0.988 which implies that 98.8% of the variations in performance of mutual funds was caused by the variations in interest rates, exchange rates and inflation. The study concluded that Interest rates are never constant and the sudden changes as experienced, may have a positive or a negative effect on mutual funds. The regression analysis results indicate that interest rate change has a high impact on performance of Mutual funds. The findings reveal that exchange rates negatively affect exchange rate and performance of mutual funds. Similarly, a negative relationship exists between performance of mutual funds and exchange rates. This implies that mutual funds are exposed to exchange rate risk exposures and there is a need to mitigate against such eventualities. Inflation rates on mutual funds and the findings revealed that there is a negative relationship between inflation and performance of mutual funds. Similarly, correlation analysis between performance of mutual funds and inflation rates and the study revealed a negative correlation. This therefore imply that in order for the mutual funds to perform well there is a need to mitigate inflation. The study recommended that due to interest rates volatility, sudden changes may result into a positive or a negative performance on mutual funds. It is therefore essential for the mutual funds to have in place laid down strategies to mitigate against interest rate volatility, alternatively, the funds need to invest diverse portfolio. It was also recommended that mutual funds must undertake strategies such as hedging exposures and there is a need to mitigate against such eventualities. As a result, mutual funds may mitigate this risks by hedging against such risks by purchasing spot contract to cushion against any negative eventualities. It was also recommended that mutual funds need to make ample inflation adjustments so that during high inflation the firms do not run losses. The study recommended that further studies should be undertaken on other micro economic variables such as Gross Domestic Products (GDP), in addition this study was undertaken over a 5 year period, it is necessary to undertake a the same research over a longer period in order to generalize the findings. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.title Effects of Macro-Economic Factors on the Financial Performance of Mutual Funds in Kenya en_US
dc.type Thesis en_US


Files in this item

This item appears in the following Collection(s)

Show simple item record

Search Repository


Browse

My Account

Context