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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: 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: 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 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: 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 is NAV? Define NAV?

Answer: NAV means Net Asset Value. The investments made by a Mutual Fund are marked to market on daily basis. In other words, we can say that current market value of such investments is calculated on daily basis. NAV is arrived at after deducting all liabilities (except unit capital) of the fund from the realizable value of all assets and dividing by number of units outstanding. Therefore, NAV on a particular day reflects the realisable value that the investor will get for each unit if the scheme is 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 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: When should you change your investment plan?

Answer: For example, as you grow older you might adopt a more conservative investment approach, pruning some of your riskier (equity-oriented) funds.
Question: What are various types of mutual funds, according to the time of closure of the schemes?

Answer: Various kinds of Mutual Fund schemes as categorized according to the time of closure of the schemes are as follows:-
(a) Open Ended Schemes.
(b) Close Ended Schemes. 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: How can the investors redress their complaints?

Answer: Investors would find the name of contact person in the offer document of the mutual fund scheme whom they may approach in case of any query, complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of asset management company and trustees are also given in the offer documents. Investors should approach the concerned Mutual Fund / Investor Service Centre of the Mutual Fund with their complaints,

If the complaints remain unres Source:
Question: What is the difference between an open-ended and close-ended scheme?

Answer: Open-ended schemes can issue and redeem units any time during the life of the scheme while close-ended schemes cannot issue new units except in case of bonus or rights issue. Hence, the number of units of an open-ended scheme can fluctuate on a daily basis while that is not the case for close-ended schemes. Another way of explaining this difference is that new investors can join the scheme by directly applying to the mutual fund at applicable net asset value related prices in case of open-ended Source:
Question: How to fill up the application form of a mutual fund scheme?

Answer: An investor must mention clearly his name, address, number of units applied for and such other information as required in the application form. He must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase. Any changes in the address, bank account number, etc at a later date should be informed to the mutual fund immediately. 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 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: Are MFs suitable for Small Investors or Big investors ? Why Should I Invest in a Mutual Fund when I can Invest Directly in the Same Instruments?

Answer: Like all other investments in equities and debts, the investments in Mutual funds also carry risk. However, investments through Mutual Funds is considered better due to the following reasons :-
(a) Your investments will be managed by professional finance managers who are in a better position to assess the risk profile of the investments;
(b) In case you are a small investor, then your investment cannot be spread into equity shares of various good companies due to high price of suc 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 it good to buy a fund just before it goes ex-dividend?

Answer: When a fund goes ex-dividend, the unit holders ( as of the ex-dividend date ) are paid out a dividend and the NAV of the fund declines by the amount of dividend per unit paid out. For an investor ( who has bought the fund prior to the ex-dividend date ), this results in an income that is tax-free in the hands of the investor and a capital loss ( as the ex-dividend NAV will be lower than the cum-dividend NAV at which the investor made his investment ) . For e.g., if a funds NAV is Rs11 and it pay Source:
Question: Why should you monitor and review your fund?

Answer: Having made an investment in a mutual fund, you should monitor it to see whether its management and performance is in line with stated objectives and also whether its performance exceeds or lags your expectations. Unlike individual stocks and bonds, mutual fund reviews are required less frequently, once in a quarter should be sufficient.
A review of the fund's performance should be carried out with the objective of holding or selling your investment in the mutual fund. You might need to s Source:

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