Mutual Fund Mastery interview preparation

Indian AMCs, distributors, registrars and the global fund houses that hire for the same skills — covering the trust structure, NAV and cut-off rules, SEBI scheme categorisation, debt risk and the Potential Risk Class matrix, passives, costs, taxation and distribution. Every question is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it; we do not invent attributions.

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100 questions, mapped to the firms that asked them

Questions: 100
Traced to a firm: 32
Firms: 19
Updated: September 2026

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019Explain the difference between actively and passively managed mutual funds.Equity schemesCoretechnicalFranklin TempletonRisk Management · San Mateo · 2017
Say this
An active fund pays a manager to pick securities and deviate from the benchmark in the hope of beating it. A passive fund replicates an index mechanically and accepts the index return minus a very small cost. The real difference is not skill — it is the cost and the dispersion of outcomes.
Then walk it
1. Active: a research team, security selection, sector tilts, cash calls. Expense ratio in India typically 50 to 120 basis points in a direct plan for equity, far more in a regular plan.
2. Passive: the portfolio is the index, rebalanced when the index rebalances. Expense ratios of 2 to 20 basis points for a large cap index fund. SEBI caps index funds and ETFs at 1 percent, and competition has pushed them nowhere near the cap.
3. The arithmetic that settles most of the debate: in aggregate, active investors hold the market, so before costs active management is a zero-sum game against other active managers. After costs it is negative-sum. That is why the median active fund underperforms.
4. Where active still earns its fee in India is dispersion. In small and mid caps, index quality is weaker, liquidity is uneven, and the gap between the best and worst quartile manager over five years is wide. In large caps, the Nifty 50 has been hard to beat consistently since the 2018 total-return-benchmark rule closed a measurement loophole.
5. Risk profile differs too. A passive fund guarantees you the index drawdown; an active fund adds manager risk on top of market risk, in both directions.
6. What I would actually say to a client: index the large cap allocation, pay for active where dispersion is high and you have done manager diligence, and never pay active fees for a portfolio that is 90 percent index.
Where candidates lose it
Framing it as active being cleverer or passive being lazier. The examinable content is the cost arithmetic and the fact that active is zero-sum before fees. And name the Indian specific — large cap active underperformance after the TRI benchmark rule — or you are answering a global textbook question.
Expect next
- Would you rather run an active or a passive product, and why?
- Why has large cap active underperformance widened in India?
- What is a closet indexer and how would you spot one?
Reported by candidates at Franklin Templeton (Risk Management, San Mateo, 2017). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.

100 questions, mapped to the firms that asked them

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Where candidates lose it

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