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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044What is an arbitrage fund, where does the return come from, and when does it dry up?Hybrid and solution schemesHardtechnicalIndian AMCsCorporate treasury desks
Say this
It buys a stock in the cash market and simultaneously sells the same stock's futures, locking in the spread between the two. The return is the cost of carry, not a market view — which means it behaves like a short-term debt fund but is taxed as equity, and that tax arbitrage is the real product.
Then walk it
1. The mechanism: if a stock is 100 in cash and the one-month future is 100.60, buying cash and selling the future locks 60 basis points regardless of where the stock goes, realised when the two converge at expiry.
2. It is fully hedged, so equity market direction is irrelevant. At least 65 percent of the book must be in these hedged equity positions, which is what makes it an equity-oriented scheme for tax.
3. The tax point is the whole commercial case. A corporate or a high-bracket individual parking money for three to six months pays 12.5 percent on long-term equity gains, or 20 percent short-term, against slab rates on a debt fund after the 2023 change. That gap is why arbitrage fund AUM exploded.
4. Returns track the cost of carry, which tracks short-term rates and market activity. Historically 4 to 7 percent, so think of it as a liquid fund equivalent with better tax rather than as an equity product.
5. When it dries up: when futures premiums compress. That happens when rates fall, when market participation and leverage are low, and — importantly — when too much arbitrage money chases the same spread. A category that doubles in AUM competes away its own return.
6. The risks people ignore: the spread can go negative in a sharp fall so rollover costs money, there is execution and roll risk each expiry, and the fund still has an unhedged residual and a debt sleeve. It is low risk, not no risk, and the exit load window is typically 15 to 30 days.
Where candidates lose it
Calling it a low-risk equity fund. It is a rates product wearing an equity tax wrapper. The second trap is not knowing why the category grew: the April 2023 debt fund tax change pushed treasury money into it. If you cannot connect the product to that tax event you are missing the commercial story.
Expect next
- What happens to the spread in a sharp market fall?
- Why did arbitrage fund AUM grow so fast after 2023?
- Would you recommend it over a liquid fund for a six-month horizon?

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

Say this

Then walk it

Where candidates lose it

Expect next