DETERMINANTS OF MUTUAL FUNDS PERFORMANCE IN NIGERIA

Abstract

This study investigates the determinants of mutual funds’ performance in Nigeria, focusing on the impact of inflation, exchange rates, and capital gains tax. Utilizing a comprehensive dataset spanning 2013 through 2022 and applying regression analysis, we find that inflation has a positive and significant effect on mutual fund performance, suggesting that mutual funds in Nigeria can leverage inflationary trends to enhance returns. Conversely, the exchange rate shows a negative but insignificant relationship, indicating that currency fluctuations have a limited impact on mutual fund performance. The capital gains tax, however, exhibits a significant negative effect, underscoring the detrimental impact of taxation on investment returns. Based on these findings, we recommend that mutual fund managers adopt inflation-hedged investment strategies, maintain currency diversification to mitigate potential exchange rate risks, and implement tax-efficient investment practices to minimize the adverse effects of capital gains tax