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Mutual Funds Interview Questions & Answers - Learning Mode

Mutual Funds Interview Questions & Answers - Learning Mode

A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want. A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.

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Subcategories for Mutual Funds Interview Questions & Answers - Learning Mode

Following are sub categories for which Interview Questions & Answers are available under Mutual Funds Interview Questions & Answers - Learning Mode. Please select the appropriate sub-category:-

Debt / Income Mutual Fund Interview Questions & Answers (3) Learning Mode | Exam Mode

Diversified / Balanced Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

Equity / Growth Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

Fund of Funds Interview Questions & Answers (1) Learning Mode | Exam Mode

Gilt Fund Interview Questions & Answers (2) Learning Mode | Exam Mode

Index Funds Interview Questions & Answers (1) Learning Mode | Exam Mode

Money Market / Liquid Mutual Fund Interview Questions & Answers (1) Learning Mode | Exam Mode

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Mutual Funds Interview Questions & Answers - Learning Mode
Try Mutual Funds Interview Questions & Answers - Exam Mode
Question: What are risks by investing funds in Mutual Funds?

Answer: Investments in stock market are risky as the value of our investments goes up or down with the change in prices of the stocks where we have invested. Therefore, the biggest risk for an investor in Mutual Funds is the market risk. However, different Schemes of Mutual Funds have different risk profile, for example, the Debt Schemes are far less risk than the equity funds. Similarly, Balance Funds are likely to be more risky than Debt Schemes, but less risky than the equity schemes. Source:
Question: Can non-resident Indians (NRIs) invest in mutual funds?

Answer: Yes, non-resident Indians can also invest in mutual funds. Necessary details in this respect are given in the offer documents of the schemes. Source:
Question: How significant are fund costs while choosing a scheme?

Answer: The cost of investing through a mutual fund is not insignificant and deserves due consideration, especially when it comes to fixed income funds. Management fees, annual expenses of the fund and sales loads can take away a significant portion of your returns. As a general rule, 1% towards management fees and 0.6% towards other annual expenses should be acceptable. Carefully examine the fee a fund charges for getting in and out of the fund. Again, you can query on entry and exit loads. Source:
Question: What are Offshore Funds?

Answer: Offshore funds specialise in investing in foreign companies or corporations. These funds have non-residential investors and are regulated by the provisions of the foreign countries where these are registered. These funds are regulated by RBI directives. Source:
Question: How are mutual funds regulated?

Answer: All Asset Management Companies (AMCs) are regulated by SEBI and/or the RBI (in case the AMC is promoted by a bank). In addition, every mutual fund has a board of directors that represents the unit holders interests in the mutual fund. Source:
Question: What is an Asset Management Company (AMC)?

Answer: The company that manages a mutual fund is called an AMC. For all practical purposes, it is an organized form of a money portfolio manager. An AMC may have several mutual fund schemes with similar or varied investment objectives. The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective. Source:
Question: What is a Mutual Fund?

Answer: A Mutual fund is an investment instrument where a large number of investors pool in their finances in a single trust. This trust is managed by a team of financial experts (known as Asset Management Company) who invest the accumulated capital in different financial assets like stocks, bonds and equities etc. All the people who invest in this fund share a common investment goal and the dividends earned from the investment is distributed in proportion to the capital invested. Source:
Question: A well known fund manager has left the mutual fund I was invested in and the returns have dwindled as well. Should I stay put or exit?

Answer: Keep a watchful eye on the fund and its performance after the older fund manager left the fund. Track the fund for some time and allow the new fund manager to choose the desired path for the fund.

This will help you as an investor to understand the investment strategy adopted by the new fund manager in terms of stock selection, asset allocation and an overall investment cycle. Do not take a call in a knee jerk reaction or a routine bear cycle. Source:
Question: What are Interval Schemes?

Answer: Interval Schemes are those that combine the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. Source:
Question: Kindly suggest if arbitrage funds are ok for earning high returns with low risk.

Answer: Don't be under the wrong impression that arbitrage funds are equity funds, which will give you high returns and also protect your downside.

Arbitrage funds are a unique fund in the sense that:
As far as the risk profile and returns are concerned, they are like a debt fund i.e. low risk and low returns.
However, as far as the tax laws are concerned they are treated on par with equity funds and as such the long term capital gains tax is nil (however note that a few arbitrage funds Source:
Question: I am planning for a mutual fund SIP. Confused between choosing growth or dividend option. Suggestions please.

Answer: Both growth and dividend options have their place and the final selection depends on your investment plan. If you are looking for a long term investment and do not need any annual dividend payouts, the growth plan is a good way to compounding your investments. If you need income at various intervals of your investment period, opting for a dividend plan is ideal. Source:
Question: What is the process for changing address in the folio?

Answer: Change of Address process for:-
KYC Complied Folios/Investors:
In case of change of address for KYC complied (verified)folios, the investors shall be required to submit the below stated documents to the designated intermediaries of the KYC Registration Agency:
Proof of new address (POA) and,
Any other document the KYC Registration Agency may specify from time to time.

KYC not Complied Folios/Investors:
In case of change of address for KYC not complied(no Source:
Question: Do any mutual funds invest in both stocks and bonds?

Answer: Yes, balanced funds invest in a combination of stocks and bonds, a typical mix is 60:40 in favour of stocks. Returns from balanced funds are normally lower than pure equity mutual funds when markets are rising, however if the market declines, the losses are also normally lower. Balanced funds are best suited for investors who do not plan their asset allocation and yet want to invest in equities. Buying separate equity and income funds for your portfolio also achieves the same results as buying a Source:
Question: Do Mutual funds provide risk diversification?

Answer: Diversification of a portfolio is among the primary tenets of portfolio structuring and a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option. Source:
Question: Why we should invest in mutual funds?

Answer: Investing in Mutual Funds is a very sensible option for the following reasons:-

Professional management of your investments
With a larger pool of resources, investors do not have to fulfill minimum investment requirement that they would have to in case of individual stocks
With a professional fund manager at the helm and a diversified portfolio in asset investment, one can be sure that the risks involved in such investments is periodically tracked to achieve aggressive f Source:
Question: Is there an easy way to check taxation liability for mutual fund Sips?

Answer: Every unit of mutual fund comes with a date of allocation of the net asset value for that particular unit. For example if you have 60 installments or SIPs, you would have 60 unique blocks in the folio. Calculation of tax must be done by checking the one year or 12 month limit for each such block. If you sell the entire holding in the mutual fund, you will need to determine the number of units that were long term ones and the number of short term units. Source:
Question: What mutual fund is suitable for you?

Answer: You should choose a mutual fund that meets your risk tolerance and your risk capacity levels (i.e. has similar investment objectives as your own). Typical investment objectives of mutual funds include fixed income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-term liquidity focus. You can use our Find-A-Fund query module to find funds whose investment objectives match yours. Source:
Question: What is an entry load and an exit load?

Answer: Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The entry load percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of redeeming (or transferring an investment between schemes). The e Source:
Question: What are various types of mutual funds, according to the periodicity of the pay outs?

Answer: Various kinds of Mutual Fund schemes as categorized according to the periodicity of the pay outs, are as follows:-
(a) Dividend Paying Schemes.
(b) Reinvestment Schemes.
Question: What are the different types of Mutual funds?

Answer: Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified funds Source:

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