Billionaire Nithin Kamath-led India’s largest stock broking firm Zerodha today announced that it would form a joint venture with fintech platform smallcase to start a new asset management business (AMC).
“While awaiting the final approval of our AMC (mutual fund), we asked if we should build it ourselves or collaborate. Given the 6+ years of experience that smallcase has in building investment products, it made perfect sense to create a joint venture (JV) to build the AMC,” Kamath tweeted.
He said smallcase, which hosts baskets of stocks or ETFs on its platform, will help Zerodha build simple low-cost passive mutual fund products. Both are Bengaluru-based startups, and Smallcase counts Zerodha as one of its investors.
Smallcase founder Vasanth Kamath said: in the last six years, smallcases have been successful in helping millions of Demat account holders build a healthy long-term portfolio, and there’s immense potential to bring the same principles of simplicity and transparency to mutual funds to bring in a new segment of investors.
“The opportunity to increase capital market participation for retail investors is massive, and we strongly believe that mutual funds will continue to accelerate this trend with the right mix of products, solutions & technology,” he said.
Back in 2021, Zerodha had got Sebi’s in-principle approval to start an AMC business. His team is ready to start selling mutual funds within 2-3 months of getting the final nod.
Bajaj Finserv, which has filed papers for launching seven MF schemes, is the latest entrant to the mutual fund industry.
In an earlier interview with ET Markets, Kamath had said that unlike the big AMCs, Zerodha won’t have any actively managed funds but only passive products targeted at long-term investors. “I don’t think there is space for another Nifty ETF or Bank Nifty ETF. We want to put some goal-oriented funds like a retirement fund which is like a targeted-date fund where equity and debt keeps rebalancing every year. Apart from that, there would be other passive products too,” Kamath had said.
Zerodha intends to approach the new business by keeping it lean, tech-first and making the selection of mutual funds simpler.
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