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. 073How would you build a portfolio for a range of clients with very different needs and requirements?Portfolio construction and adviceIntermediatecase studyVanguardInvestment Research · Malvern · 2024

   Say this

   Start from the liability, not the product. For every client I need three things: when the money is needed, how much volatility they can actually tolerate as opposed to claim to tolerate, and what tax bracket and constraints they face. The asset allocation falls out of those, and fund selection is the last and least important step.

   Then walk it

   1. Horizon sets the equity share. Money needed inside three years does not belong in equity at all, whatever the client's risk appetite, because the worst three-year outcome is too bad. Beyond ten years, equity is the low-risk choice against inflation.
   2. Then capacity versus tolerance. Capacity is arithmetic — income stability, dependants, existing assets. Tolerance is behavioural. Where they conflict, size to tolerance, because a client who redeems in a drawdown converts a paper loss into a permanent one.
   3. Then build with as few products as possible. A large cap index fund, one flexi cap or mid cap, one short duration debt fund, and a liquid fund for near-term needs covers the large majority of clients. Complexity is the enemy of adherence.
   4. Differentiate at the edges, not the core. A 30-year-old with a stable salary and a 25-year horizon gets 75 to 85 percent equity with an SIP. A 60-year-old drawing income gets a bucketed structure with an SWP from the debt sleeve. A business owner with lumpy income gets a bigger liquid buffer.
   5. Then tax and jurisdiction. An Indian investor in the 30 percent bracket routes short-horizon money through arbitrage rather than debt funds. A US-taxable client cannot hold Indian mutual funds efficiently at all, and that constraint overrides every allocation view.
   6. And write down the rebalancing rule and the review date at the start. Most portfolios fail from drift and from ad hoc changes, not from bad initial selection — which is why I would rather have an average fund list with a written policy than a brilliant fund list without one.

   Where candidates lose it

   Answering with a fund list. The interviewer is testing whether you start from the client's liabilities and constraints. Also, distinguishing risk capacity from risk tolerance, and saying you would size to the lower of the two, is the line that separates an adviser from a salesperson.

   Expect next

   • What if the client's stated tolerance is much higher than their capacity?
   • How many funds should a portfolio hold?
   • How would you handle a client with a large concentrated stock position?

   Reported by candidates at Vanguard (Investment Research, Malvern, 2024). Source: Wall Street Oasis.

2. 074How would you invest 10 million pounds?Portfolio construction and adviceIntermediatesuperdaySCSchrodersAsset Management · London · 2023

   Say this

   My first move is to ask whose money it is and what it is for, because the answer is completely different for an endowment, a pension scheme and a private individual. If you want me to pick, I will assume a taxable individual with no immediate liability and a twenty-year horizon, and I will say so before I allocate a pound.

   Then walk it

   1. State the assumptions out loud: horizon, liquidity needs, tax status, base currency, existing wealth, and whether there is a spending requirement. Making them explicit is the whole test, because the interviewer wants to see if you build from a mandate.
   2. Then a defensible allocation, roughly: 55 to 60 percent global equity, mostly indexed given the size and the cost saving available; 20 percent fixed income split between government bonds and investment grade credit; 10 percent real assets, listed infrastructure and property; 5 to 10 percent in cash and near-cash for two to three years of spending.
   3. Justify the shape, not the numbers. The equity weight comes from the horizon, the bond weight is there to fund spending in a drawdown, and the real assets are for inflation exposure the bonds cannot provide.
   4. Then implementation, which is where the size actually matters. At 10 million you get institutional share classes, so total cost can come in under 20 basis points on the passive core. Fee negotiation on that scale is worth more than most manager selection decisions.
   5. Then risks and what would change my mind: currency exposure and whether to hedge the non-sterling bonds, concentration in US mega-caps in any global index today, and sequence risk if there is a spending requirement in the first five years.
   6. And a deployment plan rather than a single date. Half now, the rest over three to six months, with a written rule so it happens regardless of how markets look at the time.

   Where candidates lose it

   Allocating immediately without asking what the money is for. The question is deliberately underspecified. But do not hide behind questions either — ask two or three, state your assumptions, and then commit to an actual allocation with reasons. Refusing to give numbers reads as evasion.

   Expect next

   • Now it is a pension scheme with liabilities in fifteen years. What changes?
   • Would you hedge the currency?
   • Active or passive, and why?

   Reported by candidates at Schroders (Asset Management, London, 2023). Source: Wall Street Oasis.

3. 075Talk me through diversification. How many mutual funds does a portfolio actually need?Portfolio construction and adviceIntermediatetechnicalNorthern TrustAsset Management · Chicago · 2025

   Say this

   Four to six for almost anyone. Diversification comes from owning uncorrelated assets, not from owning many funds, and beyond about four equity funds you are adding overlap and cost, not risk reduction. Most Indian retail portfolios hold twelve schemes that together are one large cap fund with a higher expense ratio.

   Then walk it

   1. The principle: risk falls when you add assets whose returns do not move together. Two large cap funds in the same market have a correlation near 0.95 and an enormous overlap of holdings, so the second one reduces almost nothing.
   2. Test it directly. Pull the top 20 holdings of the funds a client owns and compute the overlap. It is routine to find 60 to 70 percent common holdings across four supposedly different equity schemes, and showing a client that table is the most persuasive thing you can do.
   3. What actually diversifies an Indian portfolio: moving down the market cap curve, adding debt with a different driver, adding gold, and adding international equity, because domestic and global equity cycles genuinely differ.
   4. So the shape I would use: one core equity fund or index fund, one mid or small cap, one debt fund matched to the horizon, one liquid fund, plus optionally gold and an international sleeve. That is five or six line items and it covers everything.
   5. The costs of over-diversification are real and under-discussed: you dilute any manager skill you were paying for, you make rebalancing a multi-scheme tax event, and you make the portfolio impossible to monitor, so it never gets reviewed.
   6. One honest caveat: for a very large portfolio there is a case for splitting across AMCs to limit single-manager and single-house operational risk. That argument justifies maybe two managers per sleeve, not twelve.

   Where candidates lose it

   Equating number of funds with diversification. The answer that lands names portfolio overlap as the measurable test and points out that the second large cap fund adds cost, not diversification. Mentioning that rebalancing across many schemes is a taxable event in India shows you have advised real clients.

   Expect next

   • How would you measure overlap between two funds?
   • Does holding funds from different AMCs help?
   • Where does gold fit, and how much?

   Reported by candidates at Northern Trust (Asset Management, Chicago, 2025). Source: Wall Street Oasis.

4. 076Go over the valuation methods you would use on a stock you were considering for the fund.Portfolio construction and adviceIntermediatetechnicalInvescoAsset Management · New York · 2023

   Say this

   Three families: intrinsic, relative and asset-based. A discounted cash flow for what the business is worth on its own cash generation, trading comparables and precedent transactions for what the market is paying for similar businesses, and net asset or sum-of-the-parts where the assets are the story. I would triangulate rather than pick one.

   Then walk it

   1. DCF: project free cash flow, discount at the weighted average cost of capital, add a terminal value. It is the only method that is theoretically right and the one most sensitive to assumptions — typically 60 to 75 percent of the value sits in the terminal value, which is why I run it as a range.
   2. Trading comparables: EV to EBITDA, price to earnings, EV to sales for pre-profit businesses, price to book for financials. Fast, market-based, and circular — if the whole sector is mispriced, comps tell you nothing.
   3. Precedent transactions: what acquirers paid, which embeds a control premium and so sits above trading multiples. Useful for a floor in a takeover situation, weak for a minority stake.
   4. Special cases matter in India. Banks and NBFCs go on price to book against return on equity, because cash flow is not meaningful for a lender. Conglomerates and holding companies need a sum of the parts with an explicit holding-company discount, which in India has run at 30 to 60 percent.
   5. Then the reverse DCF, which is the technique I would actually lead with in a fund context: take today's price and solve for the growth and margin the market is assuming. It turns valuation from a forecast into a question about whether the embedded expectation is plausible.
   6. And the discipline: a valuation is a range with a stated set of assumptions, not a target price. If the answer changes from 900 to 1,400 on a one percent change in terminal growth, the honest output is that the stock is not valuable enough to own.

   Where candidates lose it

   Listing DCF, comps and precedents mechanically without saying which you would weight and why. In an asset management seat, mentioning the reverse DCF and the price-to-book treatment for financials is what shows you have valued something rather than read about valuing something.

   Expect next

   • Which method would you weight most for an Indian private bank?
   • How do you handle the terminal value?
   • What is a reverse DCF and why would you use it?

   Reported by candidates at Invesco (Asset Management, New York, 2023). Source: Wall Street Oasis.

5. 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.