Asymmetric Impact of Fed Rate Cuts on Growth and Value Mutual Fund Performance

This study investigates how U.S. Federal Reserve interest rate cuts during the 2019–2020 easing cycle influenced the performance of equity mutual funds, with a focus on con-trasting growth and value strategies. Using an event study framework, we examine abnormal returns (AR), cumulative abnormal returns (CAR), and risk-adjusted perfor-mance measured by both static and rolling (30-day) Jensen’s alpha () and Sharpe ratios (SR) across short-term (30-day) and long-term (6-month and 1-year) windows surrounding three major rate cut events. Further statistical tests reveal that growth funds significantly outperform value funds following rate reductions, especially over longer horizons. This performance premium is more pronounced in risk-adjusted returns and becomes stronger when accounting for rolling dynamics, indicating that growth funds are more responsive and sensitive to monetary easing. These findings underscore a persistent and asymmetric sensitivity of different fund styles to interest rate changes, shaped by differences in duration exposure and investor sentiment. This study offers novel insights into how monetary policy influences fund-level dynamics beyond broad market movements and deepens the understanding of monetary trans-mission in asset management by incorporating time-varying performance metrics.