Zerodha’s Asset Management Company (AMC) Takes Form and Debuts its First Mutual Funds
- ByStartupStory | October 27, 2023
Zerodha’s Asset Management Company (AMC) takes concrete form as it introduces its inaugural mutual funds. Following the green light from the Securities and Exchange Board of India (SEBI) a few months ago, Zerodha revealed the launch of two debut mutual funds, namely the Zerodha Nifty LargeMidcap 250 Index Fund and the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, on Wednesday, October 25.
The New Fund Offer (NFO) for these funds commenced on October 20 and is set to conclude on November 3. Zerodha Fund House clarified that both funds are open-ended, passive, and index equity mutual fund schemes. Their performance will be benchmarked against the Nifty LargeMidcap 250 Index Total Returns Index (TRI).
To elaborate, the index fund will replicate the Nifty LargeMidcap 250 Index, while the ELSS scheme will function as an open-ended passive equity-linked savings scheme with a mandatory lock-in period of three years. For those unfamiliar with it, the Nifty LargeMidcap 250 Index reflects the combined performance of large and midcap companies listed on the NSE, including stocks from both the Nifty 100 Index and the Nifty Midcap 150 Index.
The index fund requires a minimum SIP (Systematic Investment Plan) investment of INR 100, while the ELSS fund has set its minimum investment threshold at INR 500.
Zerodha Fund House’s CEO, Vishal Jain, expressed his excitement regarding the NFO’s launch, emphasizing their commitment to providing more Indians with access to the capital markets through straightforward products and exposures.
This development comes just two months after Zerodha received the final regulatory approval in August to commence operations for its asset management company. Zerodha Fund House, established as a joint venture between Zerodha and invest tech platform smallcase, positions itself as a passive-only AMC, focusing on transparent and affordable mutual fund offerings.
Nithin Kamath, the Co-Founder and CEO of Zerodha, had earlier explained that their foray into the mutual fund space was motivated by the aim to boost retail investor participation in Indian markets and to create easily understandable mutual funds. Kamath pointed out that despite substantial market growth in recent years, India still had a relatively shallow investor base with only a limited number of unique mutual fund and equity investors.
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This move by Zerodha enters a competitive Indian asset management space, with Reliance Jio, in partnership with BlackRock, and Groww, securing approval from SEBI for index funds. Moreover, Mumbai-based Neo recently secured $35 million in funding to expand its offerings in financial advisory and asset management.
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