Want to be a mutual fund for youngsters who are starting their investment journey: Zerodha’s Nithin Kamath

Most of the new asset management companies only want to focus on passively managed funds. But there are already several passively managed funds out there. How will the new crop of asset management companies be able to differentiate themselves?

In an interaction during Finity’s GoPassive conclave, Nithin Kamath, founder of Zerodha -- the country’s largest stock broker in terms of active investors -- shares why he wants Zerodha’s AMC foray to be passive-only and still offer differentiated passive products to investors.

How can Zerodha create disruptions in the mutual fund business?

I think there is an opportunity in the AMC business to disrupt operationally. And not really in terms of products because whatever you disrupt in terms of products, will get copied in a matter of time. When you look at some of the large AMCs around, they have large costs, which you don’t really need if you are focusing on just passively managed funds. There is also an opportunity to be like a thought leader, saying that I am only going to do passive business as selling active and passive funds at the same time is a conflicted kind of relationship. There is also an opportunity to simplify how mutual funds are sold. Youngsters, especially prefer product selection to be a simpler process, than a complex decision-making process with too many options. There is an opportunity to get this new class of investors -- 20-30-year-olds -- who are yet to start investing or have just begun their investment journey. With the number of mutual fund schemes out there, there is already a plethora of options for investors who know how to invest.