Mutual Fund Mastery interview preparation

Questions

100

Traced to a firm

32

Firms

19

Updated

September 2026

Asked at

All firmsVanguard5BLBlackRock3FTFranklin Templeton3Invesco3PIMCO3Fidelity Investments2J.P. Morgan2Morningstar2Neuberger Berman2SCSchroders2T. Rowe Price2Amundi1BMBNY Mellon1Goldman Sachs1Man Group1Northern Trust1SSState Street1Sycamore Partners1WMWellington Management1

Topic

All topicsFund structure and regulation7NAV and operations6Scheme categorisation4Equity schemes5Debt schemes7Risk, liquidity and disclosure7Index funds and ETFs6Hybrid and solution schemes3Costs, plans and commissions6SIP and investor mechanics5Performance measurement6Taxation5Distribution, compliance and NISM5Portfolio construction and advice5Estimation and numeracy5Markets and industry6Career and fit12

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 001What is a mutual fund, and what is it actually solving for an investor?Fund structure and regulationCorephone / first roundIndian AMCsDistribution and sales

   Say this

   A mutual fund is a pooled vehicle: many investors put money into a trust, a professional manager buys securities with it, and each investor owns units representing a proportionate slice of that portfolio. What it really sells is three things a small investor cannot buy on their own — diversification, professional management and operational scale.

   Then walk it

   1. Pooling is the mechanism. With 5,000 rupees you cannot own 50 stocks. Inside a fund your 5,000 buys a proportionate claim on all 50.
   2. The second thing you are buying is a research and dealing desk you could not hire. A fund manager with analysts, broker access and a compliance framework, for 50 to 150 basis points a year.
   3. The third is operations, and people underrate it. Custody, corporate action processing, tax reporting, nomination, transmission on death — the RTA does all of that for you.
   4. In India it is also a regulated wrapper. SEBI caps what the scheme can hold, caps the expense ratio, mandates daily NAV and mandates portfolio disclosure every fortnight. A PMS or an unregistered scheme gives you none of that.
   5. The honest limitation: you are buying average, minus fees. You do not control the entry price, you cannot exclude a stock you dislike, and roughly half of active equity funds will underperform their benchmark over any long window. What you get is a floor on how badly you can do relative to the market, not alpha.

   Where candidates lose it

   Defining it as 'a scheme that invests in stocks'. That is a description, not an answer. The interviewer wants to hear pooling, proportionate ownership through units and the three things the investor is actually paying for. Saying the limitation out loud in a first-round answer is what marks you as someone who has read beyond the brochure.

   Expect next

   • Then why does anyone buy a direct stock portfolio instead?
   • How is a mutual fund different from a PMS or an AIF?
   • Who bears the loss if the fund manager makes a bad call?
2. 002Walk me through the structure of an Indian mutual fund. Who are the parties and who does what?Fund structure and regulationCoretechnicalIndian AMCsRegistrars and transfer agents

   Say this

   Five parties. The sponsor sets it up and puts in the capital, the trustees hold the assets in trust for unitholders, the AMC manages the money for a fee, the custodian holds the securities, and the RTA keeps the unitholder records. SEBI sits above all of it.

   Then walk it

   1. Sponsor: the promoter, like HDFC Ltd for HDFC AMC or the State Bank for SBI Funds Management. It contributes at least 40 percent of the AMC's net worth and is the party SEBI holds accountable for eligibility.
   2. Trustees: a trustee company or a board of trustees, at least two-thirds independent. The scheme's assets legally vest in them, and they owe a fiduciary duty to unitholders, not to the sponsor. They approve scheme launches and sign off on the AMC's compliance.
   3. AMC: the entity you would actually work for. Minimum 50 crore net worth, at least half its board independent. It employs the fund managers, runs the investment process and charges the management fee out of the scheme.
   4. Custodian: a SEBI-registered custodian, independent of the sponsor, that holds the securities and handles settlement and corporate actions. This separation is what stops an AMC from quietly moving assets.
   5. RTA: CAMS or KFintech for most of the industry. Folios, purchases, redemptions, SIP mandates, statements, KYC records. Operationally it is where most entry-level mutual fund jobs actually sit.
   6. The point of the split is that no single party touches both the money and the records. The AMC decides, the custodian holds, the RTA accounts, the trustee supervises.

   Where candidates lose it

   Collapsing the AMC and the fund into one thing. Your money is not with the AMC — it is with a trust, and that is exactly why an AMC going bust does not take the scheme's assets down with it. If you cannot say who legally owns the securities, you have failed a first-round structure question.

   Expect next

   • If the AMC went insolvent tomorrow, what happens to my units?
   • Who appoints the trustees, and how independent are they really?
   • What does the custodian do that the RTA does not?
3. 008What makes up a NAV?NAV and operationsCoretechnicalMan GroupEquity Hedge · Boston · 2019

   Say this

   Market value of all the scheme's assets, plus receivables, minus all liabilities and accrued expenses, divided by the number of units outstanding. The two things people forget are the accrued expenses — the TER is charged daily, not annually — and that units outstanding changes every day in an open-ended fund.

   Then walk it

   1. Assets: securities at market value, cash and bank balances, accrued interest and dividend receivable, and receivables on trades done but not settled.
   2. Liabilities: payables on unsettled purchases, redemption payable, and the accrued portion of the expense ratio, management fee, audit fee, custody and RTA charges.
   3. Divide by units outstanding at the end of the day, after the day's creations and cancellations. In an open-ended scheme there is no fixed unit count — units come into existence when money comes in.
   4. The daily accrual of expenses is the bit that trips people. A 1.8 percent TER is charged as roughly one basis point every business day, so NAV is always net of fees. There is no separate fee deduction from your folio.
   5. Rounding conventions matter in practice: liquid and debt scheme NAVs are published to four decimals, equity to two. On a liquid fund earning 6 percent a year, the fourth decimal is real money for a treasury investor.
   6. The limitation: NAV is only as honest as the valuation of the assets. For listed equity it is a closing price and beyond argument. For an unlisted or thinly traded bond it is a model or an agency price, and that is where NAV disputes live.

   Where candidates lose it

   Giving the formula and stopping. Add the accrued expense line and the moving unit count, and name the valuation weakness on illiquid debt. A candidate who says 'NAV is assets minus liabilities over units' has answered a textbook; one who says 'and that is why an illiquid debt NAV is an estimate' has answered the question.

   Expect next

   • Whose NAV is wrong if a bond in the portfolio has not traded for three weeks?
   • How often is the expense ratio charged?
   • By when must an AMC publish NAV?

   Reported by candidates at Man Group (Equity Hedge, Boston, 2019). Source: Wall Street Oasis.

4. 010Explain the cut-off timing rules for mutual fund transactions.NAV and operationsCoretechnicalIndian AMCsFund operations

   Say this

   Three pm for everything except liquid and overnight funds, where purchase cut-off is 1:30 pm. But since February 2021 the time stamp alone does not decide anything on a purchase — you get the NAV of the day the money is actually available to the scheme for utilisation, whatever the amount.

   Then walk it

   1. Purchases in all schemes other than liquid and overnight: application received by 3 pm and funds realised by 3 pm gets the same day's NAV. Late on either leg and it is the next business day.
   2. Liquid and overnight funds: 1:30 pm for purchase, and because these schemes earn from the day of allotment, an application in by 1:30 with funds available gets the closing NAV of the previous day.
   3. Redemptions: 3 pm across the board, including liquid, and the NAV is the same day's if you are inside the cut-off.
   4. The 2021 change is the one interviewers probe. Before it, applications up to two lakh got the time-stamp NAV even if the money had not arrived. Now the realisation test applies to every rupee, which killed the practice of getting a favourable NAV on an unfunded application.
   5. Practical consequence for a distributor: a cheque or a NEFT initiated at 2:55 pm does not get you today's NAV, because it will not be credited and available for utilisation by 3. On a treasury ticket in a liquid fund, one day of NAV on 10 crore at 6 percent is about 1.6 lakh rupees.
   6. The exception to know: switches are treated as a redemption in one scheme and a purchase in the other, and the purchase leg still needs the redemption proceeds to be available, so a switch from an equity fund into a liquid fund does not get same-day liquid NAV.

   Where candidates lose it

   Quoting 3 pm and 1:30 pm and stopping. The realisation-of-funds rule is the whole modern answer, and the liquid fund previous-day NAV catches almost everyone. Say both.

   Expect next

   • An investor's money hits the scheme account at 3:10 pm. Which NAV does he get?
   • Why do liquid funds give the previous day's NAV?
   • How are switches time-stamped?
5. 013Walk me through the KYC and onboarding process for a new mutual fund investor in India, and tell me what the RTA does in it.NAV and operationsCorephone / first roundRegistrars and transfer agentsDistribution and sales

   Say this

   PAN, Aadhaar-based verification, proof of address, bank account details, a FATCA and CRS declaration and a nomination or an explicit opt-out. The record goes to a KRA and to the central KYC registry, so once it is validated the investor can transact across every AMC in the country. The RTA is the entity that holds the folio, applies the transaction and maintains the record.

   Then walk it

   1. Identity and address: PAN, which is the unique key for the whole system, plus Aadhaar-based e-KYC or a video-based in-person verification. Physical IPV still exists for cases that cannot be done digitally.
   2. Bank and tax layer: a bank account in the investor's own name for the payout mandate, FATCA and CRS self-certification, and tax residency status. Third-party payments are not accepted, which is a money-laundering control, not paperwork.
   3. Central registration: the record is filed with a KYC Registration Agency such as CVL or CAMS KRA and with CKYC at CERSAI. That is what makes KYC portable across fund houses.
   4. Since 2024 the status label matters. A KYC record is validated only if the PAN and Aadhaar are linked and the documents are of the accepted type. Registered or on-hold records can block fresh purchases at a new AMC, which is now the single most common onboarding failure in the industry.
   5. Nomination is mandatory unless the investor signs an opt-out. Getting this wrong creates a transmission problem years later that the family, not the investor, has to solve.
   6. RTA's role: CAMS or KFintech creates the folio, time-stamps the application, applies the cut-off rules, allots units, runs the SIP mandate, generates the consolidated account statement and holds the KYC. Most entry-level operations hiring in this industry is at an RTA, and this question is really asking whether you know that.

   Where candidates lose it

   Listing documents like a form-filling exercise. The examinable points are that KYC is centralised and portable, that the validation status introduced in 2024 can block a transaction at a new AMC even for an old investor, and that third-party payments are barred. Mention nomination — it is where most real folios are defective.

   Expect next

   • What is the difference between a KYC validated and a KYC registered record?
   • Can someone else pay for my SIP?
   • How does a nominee actually claim units after death?
6. 015Define large cap, mid cap and small cap for me, and explain how the AMFI list works.Scheme categorisationCorephone / first roundIndian AMCsEquity research at AMCs

   Say this

   Rank every listed company by average full market capitalisation. The top 100 are large cap, 101 to 250 are mid cap, and 251 onwards are small cap. AMFI publishes that list twice a year and every AMC must use it — there is no house definition in India.

   Then walk it

   1. Full market cap, not free float, and averaged over the six months prior, so a single volatile month cannot move a company between buckets.
   2. AMFI releases the list every six months, in consultation with SEBI. Funds get a short cooling period and then a rebalancing window — currently three months — to bring portfolios back inside the mandate.
   3. The bucket sizes are fixed by count, not by market cap value, which has a strange consequence: as the market grows, the 250th company can be a 40,000 crore business that everywhere else in the world would be called a mid cap.
   4. It drives real flows. A stock promoted from 101 to inside the top 100 becomes eligible for every large cap fund's 80 percent bucket and is no longer countable for mid cap funds. The reclassification itself moves the price.
   5. Category minimums hang off this list: large cap 80 percent in the top 100, mid cap 65 percent in 101 to 250, small cap 65 percent in 251 and below, large and mid cap at least 35 percent in each.
   6. The limitation to state: a rank-based definition means the boundary is arbitrary and moves. Two funds can both be compliant mid cap funds while owning very different businesses, because the 101st and the 250th company have almost nothing in common.

   Where candidates lose it

   Guessing the cut-offs. The 100 and 250 boundaries are the single most frequently asked recall fact in this track and getting them wrong ends the conversation. Also say 'full market cap, averaged over six months' — candidates who say free float reveal they learned it from an index methodology instead of the AMFI circular.

   Expect next

   • What happens to a mid cap fund when one of its holdings is promoted to large cap?
   • How long does a fund get to rebalance?
   • Is a rank-based definition sensible as the market grows?
7. 017Explain open-ended, close-ended and interval schemes.Scheme categorisationCorephone / first roundIndian AMCsDistribution and sales

   Say this

   An open-ended scheme creates and cancels units on demand at NAV every business day. A close-ended scheme issues a fixed number of units at launch, is listed, and returns capital only at maturity. An interval scheme is close-ended but opens a transaction window at pre-specified intervals.

   Then walk it

   1. Open-ended is the default in India and almost all retail money sits here. Unit capital floats, you transact with the AMC at NAV, and liquidity is the AMC's obligation.
   2. Close-ended: fixed corpus, fixed tenor, mandatory listing on an exchange. In theory you exit by selling on the exchange; in practice Indian close-ended schemes trade thin and at a discount to NAV, so exchange liquidity is a fiction.
   3. The argument for close-ended is that the manager has stable capital and cannot be forced to sell into a falling market. Fixed maturity plans used it well on the debt side, matching a portfolio's maturity to the scheme's.
   4. Interval schemes sit in between, with specified transaction periods of at least two working days and a gap of at least fifteen days between them. A niche product, mostly debt.
   5. One regulatory consequence: a close-ended scheme cannot be wound up early just because the manager wants out, and an open-ended one cannot suspend redemptions except in narrow circumstances with trustee approval. That distinction became very concrete in April 2020.
   6. The trade-off is honest either way: open-ended gives the investor liquidity and gives the manager a forced-seller problem. Close-ended fixes the manager's problem by transferring the liquidity risk to the investor, who then discovers the listing does not help.

   Where candidates lose it

   Claiming a close-ended scheme is liquid because it is listed. Indian close-ended schemes routinely trade at 5 to 15 percent discounts on negligible volume. Say that out loud — it is the difference between reciting a definition and knowing the market.

   Expect next

   • Why do close-ended funds trade at a discount?
   • What was a fixed maturity plan and why did they fall out of favour?
   • When can an open-ended fund stop redemptions?
8. 019Explain the difference between actively and passively managed mutual funds.Equity schemesCoretechnicalFTFranklin 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.

9. 037What's the difference between an ETF and a mutual fund?Index funds and ETFsCorephone / first roundVanguardGeneralist · Malvern · 2026PIMCOCompliance · Los Angeles · 2024

   Say this

   An ETF is a mutual fund whose units trade on an exchange. You buy it from another investor at a market price during market hours; with a regular open-ended fund you transact with the AMC at end-of-day NAV. That one structural difference drives everything else — cost, tax, minimum size and how liquidity actually works.

   Then walk it

   1. Dealing: ETF units trade intraday at whatever the market pays, which can be above or below the underlying value. A mutual fund transacts at one NAV struck after the close, the same price for everybody that day.
   2. You need a demat account and a broker for an ETF. That is a real barrier in India and the main reason index funds, not ETFs, dominate retail passive money here while the reverse is true in the US.
   3. Creation and redemption happens only in large blocks with authorised participants, so the AMC never has to sell portfolio securities to fund a retail exit. In an open-ended fund, a redemption wave forces the manager to sell.
   4. Cost: ETFs are usually cheaper because there is no registrar servicing individual folios, but the investor pays brokerage, the bid-ask spread and any premium or discount to fair value. The headline TER understates the true cost of owning a thinly traded ETF.
   5. In the US, the in-kind redemption mechanism also gives ETFs a real capital gains advantage. In India that advantage does not exist, because the fund itself is a pass-through either way — worth saying, as it separates someone who understands the structures from someone repeating a US article.
   6. Which I would recommend depends entirely on the investor: an SIP investor should use an index fund, and an institution putting 50 crore to work in one day should use the ETF.

   Where candidates lose it

   Saying an ETF is passive and a mutual fund is active. That is a common conflation and it is wrong — the difference is the trading wrapper, not the strategy. There are active ETFs and passive index mutual funds. Lead with the exchange-traded structure.

   Expect next

   • Why do Indian retail investors use index funds rather than ETFs?
   • Explain the creation and redemption mechanism.
   • When would an ETF trade at a discount to its fair value?

   Reported by candidates at Vanguard (Generalist, Malvern, 2026); PIMCO (Compliance, Los Angeles, 2024). Source: Wall Street Oasis.

10. 046What is the total expense ratio and what sits inside it?Costs, plans and commissionsCorephone / first roundIndian AMCsDistribution and sales

    Say this

    The TER is every recurring cost the scheme charges its unitholders, expressed as a percentage of daily net assets, and it is accrued daily so the NAV you see is already net of it. It includes the management fee, distributor commission in a regular plan, RTA and custody fees, audit, marketing and GST on the management fee.

    Then walk it

    1. Line items: investment management and advisory fee, trustee fee, registrar and transfer agent charges, custodian fees, audit fees, marketing and selling expenses including distributor commission, listing fees where applicable, and GST on the management fee.
    2. It is charged daily, roughly one basis point a day for a 2 percent TER, which is why there is never a separate fee debit in your account statement.
    3. What is outside it and therefore additional: brokerage and transaction costs on securities trades, up to a small permitted limit, and securities transaction tax. Those reduce NAV without appearing in the TER number.
    4. Exit load is also outside the TER, and since 2012 the exit load collected goes into the scheme, not to the AMC. So it is a transfer between investors, not a cost to the fund.
    5. The one number that matters in practice is the difference between the direct and regular plan of the same scheme, because that gap is almost entirely distributor commission. In Indian equity funds it is commonly 50 to 120 basis points.
    6. The reason to care: 1 percent a year compounds to roughly 20 percent of the final corpus over 25 years. That is not a rounding error, it is the difference between retiring on 1 crore and on 80 lakh.

    Where candidates lose it

    Not knowing that brokerage and STT sit outside the TER, or that exit load goes to the scheme rather than the AMC. Both are standard follow-ups. And always convert the percentage into a compounded rupee figure — a candidate who can quantify the drag sounds like someone who has advised a client.

    Expect next

    • What is excluded from the TER?
    • Who keeps the exit load?
    • How much does 1 percent cost over 25 years?

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.