Zerodha AMC gets final approval, Nithin Kamath says ‘motivation to start mutual fund was…’

Zerodha is all set to enter the asset management space as the company received the regulatory green signal to establish Zerodha Fund House, founder Nithin Kamath announced on Friday. Nithin Kamath also mentioned that Vishal Jain will join as the Chief Executive Officer (CEO) to build the AMC. The AMC will be built in partnership with the fintech platform Smallcase.

“We just received the final approval for the Zerodha Fund House we are building in partnership with Smallcase. Our motivation to start a mutual fund was twofold. The first was that the biggest challenge and opportunity for Indian markets is shallow participation. Even after all the growth over the last 3 years, we only have maybe 6-8 crore unique mutual fund and equity investors put together,” Nithin Kamath said in a LinkedIn post.

Mutual Funds: The perfect instrument

Nithin Kamath added that to bring the next 10 million investors, mutual funds can be the most simple instrument which is easy to understand. He even mentioned that Zerodha Fund House will soon launch its first new fund offer (NFO).

“The second was that if we had to bring in the next ten 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," Nithin Kamath said.

“I'm also excited that Vishal Jain, who's been part of the entire passive investing journey in India from day 1, has joined us as a CEO to build the AMC. So yeah, keep an eye out for our first NFO,” he added.

A new fund offer (NFO) pertains to the initial issuance of shares of a fund by an investment firm to potential investors. Much like an initial public offering (IPO) in the realm of stocks, the primary aim of NFOs is to secure funds for the investment vehicle and entice potential investors.