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. 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?
2. 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?
3. 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?
4. 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?

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.