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. 011An investor submits a 5 lakh purchase into a liquid fund at 1:20 pm and the money is credited to the scheme account at 3:10 pm the same day. Which NAV does he get, and what has he lost?NAV and operationsHardtechnicalFund operationsCorporate treasury desks

   Say this

   He gets that same day's closing NAV, not the previous day's, because the funds were not available for utilisation before the 1:30 pm cut-off. He has lost one day of accrual — on 5 lakh in a liquid fund at around 6 percent, that is roughly 80 rupees.

   Then walk it

   1. The two tests are independent: application time-stamped before 1:30, and funds available for utilisation before 1:30. He passes the first and fails the second.
   2. Because the money became available after 1:30 but still on the same day, the allotment is made at the closing NAV of the day immediately preceding the next business day — which is today's closing NAV.
   3. Had the credit landed at 4 pm and only been available the next morning, he would instead get the NAV of the day preceding that availability, so the arithmetic changes again. The rule always keys off the day the money is usable by the scheme.
   4. The reason liquid funds are structured this way is that units allotted at the previous day's NAV start earning from today. If you got yesterday's NAV without yesterday's money in the scheme, existing unitholders would be funding your return.
   5. Scale it up before you close. On a 50 crore corporate treasury ticket, one day at 6 percent is about 8 lakh rupees. This is why treasuries fund by RTGS in the morning, not by cheque at lunchtime.
   6. And the operational point: the AMC cannot make an exception. The RTA applies it mechanically off the bank credit time, and any override is an audit finding.

   Where candidates lose it

   Answering from the time stamp alone and giving him the previous day's NAV. The time stamp only makes the application valid; realisation of funds decides the NAV. Also, do not quote a rule you cannot apply — the interviewer will change the credit time to 4 pm and see if your logic survives.

   Expect next

   • Now the money is credited at 4 pm. What changes?
   • What if it were an equity fund instead?
   • How would you advise a treasury client to avoid this entirely?
2. 031Tell me what happened at Franklin Templeton India in April 2020 and what the industry learned from it.Risk, liquidity and disclosureHardsuperdayIndian AMCsRisk and compliance

   Say this

   On 23 April 2020 Franklin Templeton wound up six open-ended debt schemes holding roughly 26,000 crore, froze redemptions overnight and told investors they would get their money back as the underlying bonds matured or could be sold. It was a liquidity failure, not primarily a credit failure, and it is the single most important case in Indian mutual funds.

   Then walk it

   1. The schemes — Low Duration, Ultra Short Bond, Short Term Income, Credit Risk, Dynamic Accrual and Income Opportunities — had reached for yield in lower-rated, often unlisted and structured paper, in a market where such bonds barely trade at the best of times.
   2. Then Covid hit. Redemptions accelerated, the secondary market for sub-AAA corporate paper effectively stopped, and the funds had already borrowed to meet earlier redemptions. With nothing left to sell at any reasonable price, the AMC chose to wind up rather than keep selling the best assets and leave the remaining investors with the worst.
   3. The regulatory sequel: SEBI found violations of the regulations, barred the AMC from launching new debt schemes for two years and ordered repayment of over 500 crore of investment management fees with interest. The Supreme Court required unitholder consent for the wind-up, and SBI Mutual Fund was appointed to monetise the portfolios.
   4. Investors did get their money back — in aggregate more than the 23 April NAV — but over roughly two and a half years, in instalments, with no ability to plan around it. That gap between eventual recovery and immediate access is the definition of liquidity risk.
   5. What changed as a result: minimum liquid asset buffers of 10 percent for open-ended debt schemes and 20 percent for liquid funds, full mark to market on the debt book, the swing pricing framework, tighter caps on unlisted and structured paper, and the Potential Risk Class matrix.
   6. The lesson I would give an interviewer in one line: in debt funds the yield you can see is small and the liquidity you cannot see is the whole risk. A 60 basis point yield pickup never compensates for a portfolio you cannot exit.

   Where candidates lose it

   Calling it a default or a fraud. Most of the paper eventually paid. The failure was the mismatch between daily redemption promises and a portfolio of bonds nobody would bid for. Getting that distinction wrong on a fixed income or risk interview is fatal, because the whole post-2020 rulebook follows from it.

   Expect next

   • Could it happen again under the current rules?
   • What is the liquid asset requirement now?
   • How would you have spotted the risk in those portfolios beforehand?
3. 034How would you assess liquidity risk in a debt fund's portfolio before recommending it?Risk, liquidity and disclosureHardcase studyIndian AMCsRisk and compliance

   Say this

   Pull the monthly portfolio and ask one question of every line: who would buy this from me next Tuesday, and at what price? Then look at the other side of the balance sheet — who owns the units. Liquidity risk is the interaction of an illiquid asset book with a concentrated investor base.

   Then walk it

   1. Asset side, in order: how much is in cash, treasury bills, government securities and repo, against the 10 or 20 percent minimum. How much is unlisted. How much is rated below AA. How much sits in structured obligations or credit-enhanced paper.
   2. Then issuer and group concentration. A 9 percent position in one mid-sized NBFC is a bigger liquidity problem than a 20 percent position in government securities, because the exit is a single phone call to a market that may not answer.
   3. Then maturity profile against the fund's own category. A short duration fund holding three-year unlisted paper has reached for yield by taking illiquidity, and the yield pickup is the tell — if the portfolio YTM is 150 basis points above the equivalent gilt, something in there does not trade.
   4. Liability side: the top-10 investor concentration disclosed in the fact sheet. If a handful of institutions hold half the AUM, a single quarter-end redemption forces the sale, and retail unitholders eat the impact cost.
   5. Then the stress question I would actually run: if 20 percent of AUM redeemed on Monday, what would the manager have to sell, and would the printed NAV survive it? That is the Franklin Templeton question asked in advance.
   6. And check AUM trend. A fund shrinking steadily is concentrating its illiquid tail, because the liquid assets are the first to go out of the door. A shrinking credit fund is a warning, not a bargain.

   Where candidates lose it

   Assessing credit quality and calling it liquidity analysis. AAA paper from a small issuer can be untradeable. The two things candidates miss entirely are the top-10 investor concentration on the liability side and the AUM trend, and both are printed in the monthly fact sheet.

   Expect next

   • Where would you find the top-10 investor concentration?
   • Is a shrinking debt fund safer or riskier?
   • What yield spread over gilts would make you suspicious?
4. 040An index fund charges a 0.10 percent expense ratio but lagged its index by 0.35 percent last year. Where did the other 25 basis points go?Index funds and ETFsHardtechnicalPassive and index teamsIndian AMCs

   Say this

   Costs that sit outside the expense ratio. In order of likely size: cash drag from flows, transaction costs and securities transaction tax on rebalancing, dividend timing, and the fact that the index is a theoretical portfolio with no settlement cycle and no taxes.

   Then walk it

   1. Cash drag first. Money arriving through the day cannot be invested until it is available, and a fund holding even half a percent in cash in a year the index rose 15 percent gives up around 7 basis points.
   2. Rebalancing costs. When the index changes constituents the fund must trade, paying brokerage, securities transaction tax and market impact. Impact is the expensive part, because every index fund is trading the same name on the same day at the same close.
   3. Dividend treatment. A total return index assumes dividends are reinvested instantly on the ex-date. A real fund receives the cash days later and may pay tax on it, so it is out of the market in between.
   4. Then the small ones: creation and redemption frictions, corporate action handling, and any sampling if the fund does not fully replicate.
   5. A useful sanity number: for a large cap Indian index fund, a well-run product lands around 15 to 30 basis points of tracking difference on a 10 basis point TER. If it is more like 60 to 80, the cause is usually persistent cash drag or a small AUM that makes rebalancing expensive per unit.
   6. And the diagnostic question I would ask the AMC: is the gap stable year on year or lumpy? Stable means structural cost, which you can price in. Lumpy means operational quality, and that is the reason to avoid the fund.

   Where candidates lose it

   Answering 'the expense ratio' when the question has already told you the expense ratio. The interviewer wants the costs outside TER. Missing cash drag is the specific failure — it is usually the biggest single component and the one nobody names.

   Expect next

   • How would you reduce cash drag?
   • Why is index rebalancing expensive for everybody at once?
   • What tracking difference would you accept before switching funds?
5. 056A 62-year-old retiree has 1.2 crore and needs 60,000 a month. Design the mutual fund portfolio.SIP and investor mechanicsHardcase studyWealth and advisoryDistribution and sales

   Say this

   Sixty thousand a month is 7.2 lakh a year on 1.2 crore, a 6 percent withdrawal rate. That is too high to be safe for a 25-year retirement, so the first thing I do is say that out loud. Then I would build three buckets and run the SWP from the shortest one.

   Then walk it

   1. Start with the arithmetic, not the product. A 6 percent withdrawal growing with inflation from a portfolio expected to return 9 to 10 percent nominal has a meaningful chance of running out before age 85. Either the corpus grows, the withdrawal falls to about 4.5 percent, or there is another income source.
   2. Bucket one, two to three years of spending, around 20 lakh, in a liquid and short duration mix. This is what the SWP actually draws from, so no month's income depends on the equity market.
   3. Bucket two, roughly 40 lakh, in short duration and target maturity debt or a conservative hybrid. This refills bucket one and covers years three to eight.
   4. Bucket three, roughly 60 lakh, in equity — a large cap index fund plus one flexi cap. This is the inflation defence, and it must not be touched for a decade. Fifty percent equity at 62 sounds aggressive to a client and is the only thing that stops the corpus dying at 80.
   5. Then the operational design: SWP of 60,000 on a fixed date from the debt bucket, annual rebalancing to refill, and an explicit rule that in a year the market is down more than 20 percent you refill from debt only. That rule is what defends against sequence-of-returns risk.
   6. Tax and the honest caveat: SWP is efficient because only the gain portion is taxed, and drawing from the debt bucket keeps equity gains long-term. But I would tell him plainly that 60,000 indexed for 25 years is not comfortably fundable from 1.2 crore, and the conversation to have is about the number, not the fund selection.

   Where candidates lose it

   Jumping straight to fund names. The examinable skill is checking whether the withdrawal rate is survivable and saying so. The second failure is putting a retiree entirely in debt, which feels safe and guarantees the corpus loses to inflation over 25 years.

   Expect next

   • What withdrawal rate would you be comfortable with?
   • Why not just use an annuity or the Senior Citizens Savings Scheme?
   • How do you handle a 30 percent equity drawdown in year two?
6. 059How would you evaluate whether a fund manager is any good?Performance measurementHardsuperdayFund research and ratingsIndian AMCs

   Say this

   Start with whether the returns came from where he says they came from, then whether that source is repeatable. Performance is the last thing I look at, not the first, because five years of Indian equity data cannot distinguish skill from luck on its own.

   Then walk it

   1. First, the process. What does he claim to do, and does the portfolio show it? A manager who says he buys quality compounders and holds 70 stocks with 80 percent annual turnover is doing something else, and the gap between the story and the portfolio is the most reliable red flag in fund research.
   2. Second, attribution. Split the excess return into allocation and selection. If three years of outperformance came from being overweight one sector that happened to run, that is a bet, not a skill, and it will reverse.
   3. Third, consistency through rolling returns rather than a point-to-point number, plus behaviour in the two or three worst quarters. Downside capture tells you more about a process than upside capture does.
   4. Fourth, the operational facts that ruin otherwise good analysis: how long has he actually run this fund, how much AUM does he manage across schemes, how many other funds does he run, and has the strategy survived a size increase? A small cap manager who was excellent at 2,000 crore may be structurally unable to repeat it at 25,000 crore.
   5. Fifth, incentives and stability. Fund manager tenure in Indian AMCs is shorter than most track records, SEBI now requires part of key employees' compensation to be paid in units of the schemes they manage, and team depth matters more than the star.
   6. The honest conclusion I would give: with fifteen or twenty years of monthly data you can detect skill statistically; with five you cannot. So weight the process, the attribution and the constraints heavily, and treat the return series as corroboration rather than proof.

   Where candidates lose it

   Ranking managers by three-year or five-year returns. That is what the public does and it is why investor returns lag fund returns. The answer that lands names the statistical problem out loud — five years cannot separate skill from luck — and then explains what you look at instead.

   Expect next

   • How much history would you need to be statistically confident?
   • What would make you sell a fund?
   • How do you handle a manager who has just changed?
7. 077How would you treat different types of real estate properties differently when taking exposure in a fund?Portfolio construction and adviceHardsuperdayGoldman SachsAsset Management · Dallas · 2026

   Say this

   Segment by lease duration and by what actually drives demand, because those two things determine whether the asset behaves like a bond or like an equity. Long-lease office and industrial property is a credit-like cash flow; hotels and retail are operating businesses with a real estate wrapper, and they need a completely different discount rate and a completely different diligence list.

   Then walk it

   1. Office: value the lease, not the building. Weighted average lease expiry, tenant credit quality, concentration, rent against market rent, and the cost of re-letting. A ten-year lease to an investment grade tenant is a corporate bond with an option on the land.
   2. Industrial and warehousing: driven by e-commerce and logistics demand, shorter leases but higher renewal rates, and location relative to transport is close to everything. In India this has been the strongest segment and it is why the InvIT and REIT pipeline has tilted that way.
   3. Retail: performance is tied to tenant sales, often with a revenue-share rent, so you are underwriting consumer spending and footfall rather than a lease. Value it closer to an operating business.
   4. Hospitality: daily repricing, operating leverage, high fixed costs. This is an equity risk dressed as property, and it should carry a materially higher cost of capital than an office asset. Anyone applying one cap rate across all four segments has not done the work.
   5. Residential development: inventory and land, not yield. You are underwriting a project pipeline, approvals, execution and cash conversion, which is a corporate credit analysis, not a property valuation.
   6. For a mutual fund specifically, the access route shapes everything. Indian schemes can invest up to 10 percent of NAV in REITs and InvITs with a 5 percent single-issuer cap, so the practical exposure is listed vehicles with public disclosures and equity-like volatility, plus a distribution stream that is taxed in a mix of ways. Say that, because it is the part that converts a global property answer into a mutual fund answer.

   Where candidates lose it

   Applying one cap rate and one framework to all property. The examinable insight is that lease length converts real estate into a bond and its absence converts it into an operating business. And in a mutual fund seat, tie it back to the REIT and InvIT limits, or you have answered a real estate private equity question by mistake.

   Expect next

   • How would you compare a REIT with a direct property investment?
   • What discount rate difference would you apply between office and hotels?
   • How are REIT distributions taxed in the investor's hands?

   Reported by candidates at Goldman Sachs (Asset Management, Dallas, 2026). 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.