Zerodha Gears Up For Launch Of AMC, Files Draft Documents For Index Funds

SUMMARY

Zerodha Fund House has filed draft documents with SEBI for two funds – Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 index fund and Zerodha Nifty LargeMidcap 250 index fund

Zerodha, which has teamed up with smallcase for the mutual fund business, received the final approval from SEBI last month to start the operations of its AMC

Zerodha cofounder Nithin Kamath earlier said that the fund house would only launch index funds and exchange traded funds

Investment tech major Zerodha filed draft scheme information documents for two index funds with the Securities Exchange Board of India (SEBI) on Monday (September 4) as it gets ready for the launch of its mutual fund business.

As per SEBI’s website, Zerodha Fund House has filed the documents for two funds – Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 index fund and Zerodha Nifty LargeMidcap 250 index fund.

The tax saver ELSS fund will have a statutory lock-in period of three years. It will replicate/track the Nifty LargeMidcap 250 Index.

It must be noted that Nifty LargeMidcap 250 reflects the performance of a portfolio of 100 large-cap and 150 mid-cap companies listed on the NSE.

Zerodha has set the minimum application amount for the fund at INR 500 for new purchases and in multiples of INR 500 thereafter.

The product is suggested to be for investors looking for long term capital growth and the risk in the scheme is ‘very high’.

Zerodha Nifty LargeMidcap 250 index fund also comes under ‘very high’ risk category and is suggested for long term capital growth.

It is similar to Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 fund but would not have any lock-in period as it is not a tax-saver scheme.

The minimum application amount for the fund is INR 100 and in multiples of INR 1 thereafter for both new purchases and additional purchases.

Earlier this year, Zerodha cofounder Nithin Kamath said that the investment tech platform will team up with smallcase to foray into the mutual fund business through the launch of its asset management company (AMC). Last month, it received the final approval from SEBI to start the operations of its AMC.

Reports were brewing for weeks now that the startup would soon launch its first new fund offer (NFO).

Zerodha Fund House is headed by former Nippon India senior executive Vishal Jain.

Kamath earlier said that Zerodha would launch simple products which investors can only understand. The fund house would only launch index funds and exchange traded funds (ETFs), he added.

Zerodha would compete with the likes of SBI Mutual Fund, Nippon India, Kotak Mahindra, and several others.

The asset under management (AUM) of the Indian mutual fund industry has grown six-fold over the last 10 years to INR 46.38 Tn, as on July 31, 2023, as per data by AMFI.