Zerodha under the leadership of CEO Nithin Kamath has received approval, from SEBI to establish an asset management company (AMC) in collaboration with Smallcase. Their primary focus will be, on providing user index funds with the aim of facilitating market participation by offering clear and accessible investment options.
Zerodha, under the leadership of CEO Nithin Kamath, has secured the final green light from the Securities Exchange Board of India (SEBI) to establish an asset management company (AMC). The news was shared by Kamath on the platform formerly known as Twitter.
Teaming up with the Amazon-backed wealth management firm Smallcase, Zerodha AMC is all set to unveil a range of index funds. These funds, including equity traded funds (ETFs), are designed with a focus on accessibility and clarity, ensuring they are comprehensible to all types of investors. Overseeing this venture will be Vishal Jain, a former member of the Nippon India Mutual Fund team.
Kamath outlined the driving forces behind Zerodha’s entry into the mutual fund arena. Firstly, the company aims to tackle the issue of limited participation in Indian markets, a challenge that also presents a significant opportunity. Despite notable growth in recent years, the combined number of unique mutual fund and equity investors remains relatively modest, at approximately 6-8 crore.
The second motivation stems from the need to attract the next wave of investors, around ten million in number. Kamath emphasized the importance of providing these newcomers with straightforward investment products that are easy to grasp. Mutual funds were identified as the ideal instrument to achieve this goal.
In April of this year, Zerodha made headlines by announcing a strategic partnership with Smallcase to launch its AMC. This decision was underscored by Smallcase’s extensive experience of over six years in crafting investment products.
Zerodha’s journey toward establishing its AMC began with SEBI’s preliminary approval in September 2021. The company had submitted its application for a mutual fund license back in February 2020. This strategic move aligned with Zerodha’s broader vision of expanding its investment portfolio and accessing the passive investor segment.
