Axis Mutual Fund Interview Questions

Mutual Fund Questions

  • Is a mutual fund with a low NAV better?
  • The difference in the performance of a Dividend or Growth Plan?
  • What are the tax benefits in mutual funds?
  • What are the charges in mutual funds?
  • Is it a good time to invest in mutual funds?
  • Should I invest in Infrastructure funds?
  • Equity Vs Real Estate – which one is better?
  • Mutual Funds or Direct Equity – who is the winner?
  • Low NAV Vs High NAV Mutual Funds

    Question: Is it worth to go for a SIP in a fund where the NAV price is very high. Say HDFC Equity where NAV is around Rs 200?

    Answer: You should not consider NAV as a deciding factor while investing in Mutual Funds. It is a myth that it’s good to invest in Mutual Fund with low NAV mutual funds because you will get more units and that means more returns. Let me clarify high or low has nothing to do with the future performance of the fund – NAV keeps changing due to the performance of the fund and that depends on markets & fund manager performance.

    The only good thing with a higher NAV fund is that it is having some past track record to show. Low NAV is a gimmick used by agents to introduce you to new funds where their commission is higher. Say NO to NFO.

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    Check calculation of high an

    Tax benefits in Mutual Funds

    Question: What are the tax benefits I can get while investing through mutual funds? Are there any special funds where I can invest to avail tax benefits?

    Answer: Tax benefits in Mutual Funds keep changing from time to time. According to current laws, a few of the tax benefits are No long term gain tax on the sale of equity mutual fund(the long term here means 1 year plus), Tax-free dividend, No dividend distribution tax in case of equity mutual fund, Benefit of indexation in case of debt mutual fund & Lower long term gain tax in comparison to any other interest-bearing product. You can also invest in Equity Linked Tax Saving Schemes of mutual fund to take benefit under section 80 C. ELSS schemes have a locking period of 3 years & as the name suggest it invest in equity shares.

    Mutual Fund Charges

    Question: How the mutual fund charges its annual maintenance fee from the investor? Does it reflect in the NAV we get against the amount investor pays? How can an investor calculate it from the statement it receives? Other than this any other charges?

    Answer: You are lucky that you are asking me this question in the No Entry Load era so there are only annual charges that you have to pay. Mutual Funds deduct Annual Maintenance Charges from the fund that you are investing in. Charges depend on the type of fund & the size of fund you are investing into. Charges are higher in the case of equity funds if compared to debt funds – if the size of the fund is big charges are comparatively low. Charges are levied in the guidance of SEBI & the maximum charges that are allowed in the case of Equity fund are 2.5% & in the case of debt are 2.25% in a year. These charges are used for asset management, distribution cost, custodian charge, registrar charge, etc. These charges are automatically deducted from your NAV on daily basis. So the NAV you see is after adjusting these charges. It can’t be calculated through a statement but you can check these expenses in the monthly factsheet.

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