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. 012How do you value a corporate bond in a scheme portfolio that has not traded for three weeks?NAV and operationsHardsuperdayFund operationsFixed income desks

   Say this

   You do not use your own judgement. SEBI requires every AMC to value debt at the security-level prices supplied by the two mandated valuation agencies, CRISIL and ICRA, using the average of the two. Everything on a scheme's debt book is marked to market now — the old amortisation shortcut is gone.

   Then walk it

   1. The agencies build a matrix from whatever did trade: benchmark government yields, plus a credit spread for that rating and maturity bucket, adjusted for any traded prices in the same issuer.
   2. If there is a trade in the security above a minimum size on that day, the traded price governs. Where there is none, the matrix price applies, which is why two identical bonds of the same issuer and maturity carry the same price across every AMC in the country.
   3. The history matters here. India used to allow amortisation for short residual maturities, first under 60 days then under 30. After 2019 and 2020 SEBI moved the whole debt book to mark to market, so a liquid fund's NAV now moves with rates instead of pretending it cannot.
   4. A default or a downgrade below investment grade triggers a different path: the agencies publish a haircut matrix, the security is written down to the indicated recovery value, and the AMC may create a segregated portfolio.
   5. The AMC can deviate from the agency price only with documented justification, and it must report every deviation to the trustee and disclose it. That audit trail is the control.
   6. The honest limitation: a matrix price is a model, not a market. In a stressed market the printed NAV is achievable only for small redemptions, which is exactly the gap that swing pricing and the 10 percent liquid asset rule were designed to plug.

   Where candidates lose it

   Saying you would mark it at cost or amortise it. That was the pre-2019 world and quoting it dates you badly. The strong answer names the two agencies, says average of the two, and then admits that a matrix price is not an exit price.

   Expect next

   • What happens to the price when the issuer is downgraded to default?
   • Why did SEBI move away from amortisation?
   • How does this interact with swing pricing?
3. 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?
4. 014Why did SEBI rationalise mutual fund scheme categories in 2017, and what actually changed?Scheme categorisationIntermediatetechnicalIndian AMCsProduct and strategy roles

   Say this

   Because AMCs were running dozens of near-identical schemes with different names and no comparable definitions, so an investor could not tell two large cap funds apart. The October 2017 circular defined five groups and a fixed set of categories with hard asset allocation rules, and restricted each AMC to one scheme per category.

   Then walk it

   1. The problem it solved: a fund house might run eight equity schemes that all owned the same 40 large caps, sold as eight different ideas, mostly to keep NFO commissions flowing. Comparison across AMCs was impossible.
   2. Five groups: equity, debt, hybrid, solution-oriented, and other, which is index funds, ETFs and fund of funds. Inside them SEBI prescribed the categories — ten on the equity side, sixteen on debt, six hybrid, two solution-oriented.
   3. Each category got a binding definition. A large cap fund must hold at least 80 percent large caps. A mid cap fund at least 65 percent mid caps. A focused fund no more than 30 stocks. The definition is not marketing, it is in the SID.
   4. One scheme per category per AMC, with carve-outs for index funds and ETFs tracking different indices, fund of funds with different underlying, and sectoral or thematic funds, because each sector is genuinely a different product.
   5. AMCs complied by merging and renaming, and there were real casualties: schemes with long track records were merged into others, which reset the comparable history investors had relied on.
   6. The honest critique: it made categories comparable but pushed differentiation into the sectoral and thematic bucket, where there is no one-scheme limit. That is why the NFO pipeline today is mostly thematic funds and passive launches.

   Where candidates lose it

   Describing it as 'SEBI reduced the number of schemes'. It did not cap the count — it defined the categories and restricted duplication within a category. And know the exceptions, because the follow-up is always whether an AMC can launch two index funds.

   Expect next

   • Can one AMC run two large cap funds?
   • Which categories are exempt from the one-scheme rule?
   • Has it actually made comparison easier?
5. 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?
6. 016What is the difference between a multi cap and a flexi cap fund, and why does the flexi cap category exist at all?Scheme categorisationIntermediatetechnicalIndian AMCsProduct and strategy roles

   Say this

   A multi cap fund must hold at least 25 percent each in large, mid and small caps. A flexi cap fund has no such split — just 65 percent in equity, allocated wherever the manager wants. Flexi cap exists because SEBI created it in late 2020 as an escape hatch after it forced the 25-25-25 rule on multi caps.

   Then walk it

   1. Before September 2020, multi cap meant 65 percent equity and full discretion. In practice most multi cap funds were 75 to 80 percent large cap, which SEBI thought was mis-selling a diversified product.
   2. SEBI's fix imposed a minimum 25 percent in each of large, mid and small, taking the equity minimum to 75 percent. That would have forced tens of thousands of crores into small caps on a deadline.
   3. The industry pushed back on the liquidity impact, and within two months SEBI created flexi cap: 65 percent equity, no cap-bucket constraint. Most large multi cap funds immediately converted to flexi cap and kept doing what they were doing.
   4. So today the two categories are genuinely different products. Multi cap is a structurally higher-risk, rules-based allocation with mandatory small cap exposure. Flexi cap is a manager-discretion mandate that in practice behaves like a large cap fund with a tail.
   5. When recommending, that distinction is the whole point. If a client wants a single equity fund and is comfortable with volatility, multi cap gives forced small cap exposure they would otherwise never rebalance into. If they want the manager to de-risk in expensive markets, flexi cap allows it.
   6. The honest caveat: flexi cap's flexibility is only useful if the manager uses it, and most do not move cap allocation much. Check the last three years of portfolio disclosures before you believe the label.

   Where candidates lose it

   Saying they are the same thing, or getting the direction of the constraint backwards. Multi cap is the constrained one, despite sounding more flexible. And knowing the 2020 sequence — the 25-25-25 rule, then flexi cap two months later — is what shows you follow the regulator rather than a coaching sheet.

   Expect next

   • Which of the two would you expect to be more volatile, and by how much?
   • Why did SEBI back down so quickly?
   • How would you check whether a flexi cap manager actually flexes?
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. 018Walk me through the equity scheme categories SEBI permits.Equity schemesIntermediatetechnicalIndian AMCsProduct and strategy roles

   Say this

   Eleven, once you count flexi cap. Large cap, large and mid cap, mid cap, small cap, multi cap, flexi cap, dividend yield, value, contra, focused, sectoral or thematic, plus ELSS as the tax-linked one. Each carries a minimum equity allocation and most carry a cap-bucket rule.

   Then walk it

   1. Cap-based: large cap 80 percent in the top 100, mid cap 65 percent in 101 to 250, small cap 65 percent in 251 plus, large and mid cap at least 35 percent in each, multi cap 25 percent in each of the three, flexi cap 65 percent equity with free choice.
   2. Style-based: value and contra both need 65 percent equity, and crucially an AMC may run one or the other, not both, because SEBI treats them as the same product sold two ways. Dividend yield needs 65 percent equity predominantly in dividend-yielding stocks.
   3. Concentration: focused funds hold a maximum of 30 stocks with 65 percent equity. That cap is the product.
   4. Sectoral and thematic: 80 percent in the stated sector or theme, and this is the one category where an AMC can run many schemes, which is why it is where the launch activity is.
   5. ELSS: 80 percent equity, three-year lock-in per instalment, eligible under section 80C for investors who are still in the old tax regime.
   6. What the list does not give you is a risk ranking. A thematic fund at 80 percent in one sector is riskier than a small cap fund on concentration but may be less volatile on drawdown. The category tells you the constraint, not the risk — that is what the risk-o-meter is for.

   Where candidates lose it

   Reeling off names with no numbers. The interviewer is checking the minimum allocations, because those are the constraints you would have to monitor in a real job. If you only remember three, remember large cap 80, mid and small cap 65, focused 30 stocks.

   Expect next

   • Can an AMC run both a value fund and a contra fund?
   • Which of these categories would you expect to have the highest tracking error to the Nifty?
   • Where does an equity savings fund sit?
9. 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.

10. 020What is an ELSS, and how does the lock-in interact with an SIP?Equity schemesIntermediatetechnicalIndian AMCsDistribution and sales

    Say this

    An equity linked savings scheme is an equity fund with at least 80 percent in equity and a three-year lock-in, eligible for a section 80C deduction of up to 1.5 lakh for investors on the old tax regime. With an SIP, the three years run separately from each instalment, not from the start of the SIP.

    Then walk it

    1. Three years is the shortest lock-in among 80C options — PPF is fifteen, NSC is five, a tax-saving fixed deposit is five — and it is the only one with full equity exposure.
    2. The SIP mechanic is the examinable bit. A January instalment unlocks the following January three years later. A 36-month SIP is therefore fully liquid only after 72 months from the first instalment, and redemption follows first-in first-out.
    3. Lock-in also means the manager cannot be forced to sell. That is a genuine structural advantage: an ELSS never faces a redemption wave in a crash, so it can stay invested where an open-ended fund is selling.
    4. Taxation on exit is normal equity taxation, long-term by definition because of the lock-in: 12.5 percent above the 1.25 lakh annual exemption on equity gains.
    5. The commercial reality has shifted. Under the new tax regime, which most new taxpayers default to, there is no 80C deduction, so the entire case for ELSS collapses and net flows into the category have gone flat to negative.
    6. So the honest advice today: if a client is on the new regime, ELSS is just a flexi cap fund with an unnecessary lock-in. Do not sell the lock-in as discipline when a plain equity fund does the same job with liquidity.

    Where candidates lose it

    Saying the whole SIP unlocks three years after it starts. It is per instalment, and a distributor who gets this wrong creates a furious client at the worst possible moment. Second trap: pitching ELSS to someone on the new tax regime, which is now most new investors.

    Expect next

    • A client has run an ELSS SIP for four years. How much can he redeem today?
    • Does the lock-in help or hurt the fund manager?
    • Is ELSS still worth selling under the new tax regime?

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.