Wellington interview questions

A first-round question for analyst programmes at long-only equity managers.

Before buying a single stock for an active equity fund, what do you need to know about its benchmark, objective and constraints? Why is a benchmark not simply a scorecard?

A first-round calculation that tests whether a candidate can describe a portfolio decision relative to its benchmark.

A global equity fund owns 6% in Company X, 1% in Company Y and 0% in Company Z. Its benchmark weights are 3%, 4% and 2%, respectively. Calculate the active weight in each name and explain what an…

You are interviewing at an active manager. This question is not rhetorical.

Most active managers underperform their benchmark after fees. Why are you pursuing a career in active management? Make the strongest case, and acknowledge the strongest counterargument.

Asked to test whether you can hold a nuanced view on a politicised topic.

Should ESG factors be part of a fundamental investment process? Make the case on investment merit rather than on values.

Guaranteed in every asset management, equity research and long/short interview.

Pitch me a stock. Structure your answer as you would in an interview, covering thesis, valuation, catalysts and risks.

Tests whether an equity analyst can turn a headline beat into a tradable, falsifiable view.

A company beats quarterly EPS by 6%, but management keeps full-year guidance unchanged. The share price rises 9% on the day. How would you decide whether to add to a position, hold it, or sell into…

Tests your investment philosophy. There is no formula, but there is a right structure.

What makes a business high quality? How would you assess whether a competitive advantage is durable?

An offer-level portfolio-management case on treating redeeming and remaining clients fairly under liquidity pressure.

Your long-only equity fund receives a 12% redemption request to settle in five trading days. Its 8% small-cap holding trades only 5% of its average daily volume without material market impact; its…

An offer-level case for fundamental investors, where process matters more than sounding brave in a drawdown.

Your fund owns a 7% position in a consumer company because you underwrote stable pricing power and margin expansion. A major competitor cuts prices, the company misses earnings, and the share price…

The analytical core of fundamental investing. Expect it at quality-focused shops.

Define ROIC and explain how it relates to growth in creating value. When does growth destroy value? How do you decompose ROIC to find out what's actually driving it?

A long-only portfolio-management judgement question about letting winners run without allowing a position to become an unmanaged risk.

A stock you bought at a 3% portfolio weight has doubled and is now an 8% weight. The thesis remains intact, but the valuation is above your base-case fair value. How would you decide whether to trim,…

An evidence-weighting exercise that makes confidence explicit before the recommendation.

You are reviewing a consumer compounder after a profit warning. Allocate 100 confidence points across bullish, bearish and unresolved explanations as evidence arrives, then make a position…

A desk-level vocabulary question that connects yield curves to realised portfolio returns.

What are carry and roll-down in a bond portfolio? Why can a manager earn money even if yields do not move?

A practical allocation question for multi-sector fixed-income and client-portfolio interviews.

When would you favour Treasuries over investment-grade corporate bonds, and when would you do the opposite?

A basic calculation used to test whether a candidate can translate a rate view into portfolio risk.

Your bond portfolio has a modified duration of 6. If yields rise by 25bp, what happens to its value, and what does the estimate leave out?

A portfolio-review question testing whether you can explain a corporate-bond return without merely repeating its total return.

An investment-grade corporate bond has a Treasury duration of 5.0 and a spread duration of 4.5. During the month, its Treasury yield falls 20bp while its credit spread widens 30bp. Ignore carry and…

Tests whether you can distinguish realised inflation protection from an inflation forecast.

When would you buy an inflation-linked government bond instead of a nominal government bond of the same maturity?

A final-round portfolio case that makes candidates prioritise several risks under one mandate.

You manage a core bond fund benchmarked to the Aggregate index. Growth is slowing, inflation is falling but still above target, and investment-grade spreads are tight. How would you position the fund?

The second major allocation decision in a multi-sector bond mandate.

Investment grade spreads are at 90bp, near historic tights. Do you underweight credit? Walk me through the decision.

The primary active decision in a fixed income mandate.

You run a bond fund benchmarked to an index with a duration of 6.5. You think rates will fall. How do you position, and how much risk is that?

A foundational multi-asset question before tactical views are discussed.

What is a policy portfolio, and why does it matter more than most tactical decisions?

Asked for endowment, pension and wealth portfolios with spending needs.

An investor says they need CPI plus 4% over the long term. What does that mean for portfolio construction?

A portfolio construction question for allocation roles.

What is risk budgeting in a multi-asset portfolio?

The organising distinction in any multi-asset mandate.

Explain strategic and tactical asset allocation. Which contributes more to returns, and how much should a manager deviate?

A multi-asset portfolio construction exercise with a fixed risk budget and changing correlations.

You inherit a balanced mandate with ten units of active risk. Allocate them across competing exposures, then rebalance when the inflation regime changes. Every allocation must use the full risk…

A multi-asset allocation case after equities and nominal bonds fall together.

Equities and government bonds both sell off after an inflation surprise, leaving the portfolio below its volatility budget. How would you rebalance without mechanically buying the assets that fell…

A recurring earnings-quality question in research and long/short interviews.

Two identical software companies: one capitalises development costs, the other expenses them. How do their financials differ, and which reports better numbers?

The daily judgement call in a research analyst's modelling work.

A company guides to 8–10% revenue growth. Where do you put your estimate, and why?

A reasoning question with no single right answer. The interviewer wants your framework.

Two companies in the same industry have identical revenue, EBITDA and growth. One trades at 12x EV/EBITDA, the other at 7x. Give me the possible explanations.

Asked to check you understand which job you're applying for.

What's the difference between buy-side and sell-side research? Which is the harder job?

Tests whether you understand that stock returns and business quality are different things.

Your favourite company beats earnings and raises guidance, and the stock falls 8%. Explain how that happens.

Tests whether you can critique the tools you use.

Compare EV/EBITDA and P/E. Give a specific situation where each one gives a misleading signal.

Interviewers use this to check whether you know which cash flow belongs in which analysis.

Define unlevered free cash flow, levered free cash flow and free cash flow to the firm as reported by companies. When is each used, and why do the definitions disagree?