What does it indicate if a debt fund's AUM falls sharply in a short period without a corresponding fall in NAV?
🎯 0% of students got this wrong
EXPLANATION
A sharp AUM drop without NAV decline indicates large outflows (redemptions). For debt funds holding illiquid instruments, this can force the manager to sell liquid assets first, leaving the portfolio with a higher concentration of illiquid/lower-quality bonds — increasing risk for remaining investors.
What is 'accrual income' in a debt fund, and how does it relate to credit quality?
🎯 0% of students got this wrong
EXPLANATION
Accrual income is the coupon/interest income earned as bonds are held. Credit risk funds and medium duration funds often pursue an accrual strategy by holding lower-rated bonds that pay higher coupons. The trade-off is that lower-rated issuers carry higher default risk.
Which of the following return metrics is most appropriate for evaluating SIP performance in a mutual fund?
🎯 0% of students got this wrong
EXPLANATION
XIRR (Extended Internal Rate of Return) is the correct metric for SIP performance evaluation because it accounts for the timing and size of each irregular cash flow (monthly SIP instalments and the final redemption). CAGR works for lump sum investments with a single investment date.
An investor evaluating two funds finds that Fund X has consistently been in the top quartile over 1-year, 3-year, and 5-year periods. What does this indicate?
A.Fund X is guaranteed to continue outperforming in future
B.Fund X is the only fund worth investing in within its category
C.Fund X has taken significantly more risk than its peers to achieve this ranking
D.Fund X has demonstrated consistent performance across multiple time periods, which is a positive but not sufficient indicator of future performance