Zerodha, a leading player in investment technology, has taken significant steps toward launching its mutual fund business by filing draft scheme information documents with the Securities Exchange Board of India (SEBI). The move marks a significant development as the company gears up to expand its financial offerings.
Filing for Two Index Funds
According to SEBI’s official website, Zerodha Fund House submitted the draft documents for two index funds. The first is the “Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 index fund,” which carries a statutory lock-in period of three years. This fund will closely track the Nifty LargeMidcap 250 Index, which comprises 100 large-cap and 150 mid-cap companies listed on the National Stock Exchange (NSE).
Zerodha’s Mutual Fund Offerings
The Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 fund targets investors seeking long-term capital growth but carries a ‘very high’ risk rating. Zerodha has set the minimum application amount for this fund at INR 500 for initial purchases, with subsequent investments requiring multiples of INR 500.
The second fund, the “Zerodha Nifty LargeMidcap 250 index fund,” also falls into the ‘very high’ risk category and is designed for long-term capital growth. Unlike its counterpart, this fund does not have a lock-in period, as it is not a tax-saving scheme. The minimum application amount for this fund is INR 100, with multiples of INR 1 for both initial and additional purchases.
Expansion Plans and Strategic Approach
Earlier this year, Zerodha co-founder Nithin Kamath revealed the company’s plans to enter the mutual fund arena through the launch of its asset management company (AMC) in collaboration with smallcase. After receiving the final approval from SEBI last month, Zerodha’s move to file draft documents for index funds aligns with its strategic vision.
Vishal Jain, formerly a senior executive at Nippon India, leads Zerodha Fund House as its head. Kamath emphasized the company’s commitment to offering simple and understandable products to investors, focusing on index funds and exchange-traded funds (ETFs).
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Competing in the Mutual Fund Landscape
With this entry into the mutual fund space, Zerodha joins a competitive landscape that includes established players such as SBI Mutual Fund, Nippon India, Kotak Mahindra, and several others. India’s mutual fund industry has witnessed remarkable growth, with assets under management (AUM) surging six-fold over the past decade to reach INR 46.38 trillion as of July 31, 2023, according to data from the Association of Mutual Funds in India (AMFI). This expansion underscores the increasing demand for investment vehicles in the country’s financial market.
