Zerodha, renowned in the stockbroking sector for its zero-brokerage model, has made a significant foray into the mutual fund industry.
Stock Market: Zerodha has carved a unique niche for itself in India's financial technology landscape. Initially revolutionizing stockbroking with its zero-brokerage model, the company is now making waves in the mutual fund sector. Zerodha Fund House, launched in late 2023, has achieved remarkable success in just 18 months, garnering significant investor trust.
This success is largely attributed to Zerodha's CEO, Nithin Kamath's strategy, and the crucial role played by their 'hero fund,' the LIQUIDCASE ETF, which has opened up new avenues for investors.
7 Lakh Investors and ₹6,400 Crore in Savings
Nithin Kamath recently announced via a post that Zerodha's fund house has completed 18 months of operation. During this period, over 7 lakh investors have entrusted their funds with Zerodha's mutual funds, investing a total of ₹6,400 crore. Significantly, this achievement was accomplished without a large-scale marketing campaign, highlighting the appeal of Zerodha's transparent, low-cost model to Indian investors.
LIQUIDCASE ETF – Nithin Kamath's 'Hero Fund'
A cornerstone of Zerodha's success story is its LIQUIDCASE ETF, also referred to as the 'hero fund' by Nithin Kamath. This liquidity-focused ETF offers investors an opportunity to participate in mutual fund investments with reduced risk and enhanced liquidity. Kamath revealed that this fund's Assets Under Management (AUM) surged to ₹4,700 crore in just 15 months.
This figure stood at merely ₹843 crore in April 2024. Thus, LIQUIDCASE ETF has achieved over a fivefold increase in a short span, making it one of the most successful retail ETF launches in India.
Zerodha Fund House Strategy
Zerodha's fund house is built on transparency and simplicity. Its aim is to provide accessible, affordable, and reliable mutual funds and ETFs to investors. Zerodha has focused on eliminating intermediaries, directly connecting investors to the market through its platform. This has resulted in lower fund costs and increased accessibility of returns for a wider range of investors.
Nithin Kamath has stated his commitment to offering investors 'simple, smart, and transparent' investment options, enabling everyone to invest their money wisely without complexity.
Initiating Change in the Mutual Fund Sector
Zerodha's initiative has created a new wave of change in the Indian mutual fund industry. Compared to traditional fund houses, investors are offered lower fees, superior technological facilities, and easily understandable products. Experts believe this success will further boost the popularity of ETFs and index funds among retail investors. As India's financial market becomes increasingly digital, such platforms will likely become the preferred choice for investors.
While Zerodha has made a b market debut, the mutual fund sector is highly competitive. Large companies are also promoting ETFs and index funds. Therefore, Zerodha must continue to innovate with new products, enhanced customer service, and technological advancements. Furthermore, educating and raising awareness among investors regarding informed investment decisions remains crucial. Zerodha aims to take the lead in this area as well.
