In a significant development, Zerodha, the pioneering discount broker, has cleared the final regulatory hurdle to establish its own asset management company (AMC). Nithin Kamath, the founder of Zerodha, made the announcement on August 11, revealing that industry veteran Vishal Jain has been appointed as the Chief Executive Officer (CEO) to lead the operations of the newly formed AMC.
“We just received the final approval for the Zerodha AMC that we are building in partnership with Smallcase,” Kamath shared on X, the social media platform formerly known as Twitter. The collaborative effort between Smallcase, a prominent wealth management firm, and Zerodha was unveiled in April, signaling their joint venture in the AMC arena.
Expressing his enthusiasm, Kamath elaborated, “I’m also excited that Vishal Jain, who’s been part of the entire passive investing journey in India from day one, has joined us as a CEO to build the AMC.”
The journey to establish the Zerodha AMC has been marked by regulatory milestones. Back in September 2022, Zerodha secured the in-principal approval from the Securities and Exchange Board of India (SEBI) for the creation of the AMC. This endorsement arrived approximately 19 months after the initial application for a mutual fund license was submitted in February 2021.
Providing insights into the motivations driving Zerodha’s foray into the mutual fund landscape, Kamath explained the dual focus behind the initiative. “The first was that the biggest challenge and opportunity for Indian markets is the shallow participation. Even after all the growth over the last three years, we only have maybe 6-8 crore unique mutual fund and equity investors put together,” he remarked.
“The second was that if we had to bring in the next 10 million investors, they needed simple products they could understand, and mutual funds were a perfect instrument. We aim to be index-only and create simple funds and ETFs that all investors can understand and invest in for all their goals,” Kamath added, underlining the commitment to providing accessible and comprehensible investment options.
Zerodha, initially established in 2010 as a ‘Rs 20 per order broker,’ swiftly gained traction as a no-frills, cost-effective player among traders, particularly within the realm of high-volume derivatives trading.
The entry of Zerodha into the mutual fund domain is expected to resonate across the sector. Kamath teased about the impending debut of their first new fund offer, stating “keep an eye out.”
With the regulatory nod secured and a seasoned leader at the helm, Zerodha’s venture into asset management stands poised to make notable ripples within India’s financial landscape.