Zerodha has received permission to set up an asset management company, founder and CEO Nithin Kamath revealed on Friday. The discount broking firm has got the final approval from the Securities and Exchange Board of India (SEBI), Kamath announced on X, formerly known as Twitter.
According to a PTI report, Kamath informed that the new business of the firm will be headed by industry veteran Vishal Jain. He said, “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”.
Earlier in April this year, Zerodha along with Smallcase, a wealth management firm, announced a joint venture to launch Zerodha AMC business. Kamath added in his post, “We just received the final approval for the Zerodha AMC that we are building in partnership with Smallcase.”
Zerodha applied for a licence to start mutual fund operations back in February 2020, the report noted. Regarding the final approval, Kamath explained the company’s motivation to go ahead with the mutual fund was twofold. “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 said.
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He further added, “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.”
The brokerage firm began in 2010 as a ‘Rs 20 per order broker’ and gradually became popular as a no-frills, economic player among traders, specially high-volume derivatives traders. The firm’s entry in the mutual fund industry is likely to be watched by the relevant stakeholders.