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. 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?
2. 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.

3. 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.