Zerodha founder and CEO Nithin Kamath’s recent remarks about direct mutual funds have triggered a public spat with rival platform Groww.
Kamath was speaking about whether online discount investment platforms should offer regular mutual funds that have commissions built in.
Reiterating his company’s belief, Kamath said Zerodha, being a discount broker, has always operated with the view that customers should not pay more if they are investing large sums of money. His brokerage firm charges same fees regardless of the size of the trade, he added.
Kamath said the same logic applies to mutual funds, and customers should be able to buy direct mutual funds on online platforms without having to pay additional expenses under regular plans.
Highlighting its Coin platform, Kamath said it has resulted in savings of thousands of crores by customers who were able to buy direct mutual fund plans.
What triggered a response from Groww was the Zerodha founder’s remark that while many platforms offering direct mutual funds had largely disappeared or pivoted, those remaining were also rethinking their choice of offering direct plans.
While Kamath did not mention his rival directly, his remarks were clearly aimed at Groww as the platform has reportedly started offering regular mutual funds under its Prime offering.
Groww said it will continue to offer direct mutual funds without any commissions as always, adding the Prime offering was an additional product for customers who wanted to avail of advisory services.
“If you are a DIY customer on Groww today, nothing changes,” the company said, labelling as “simply incorrect” any suggestion that direct mutual funds were no longer being offered.
It may be noted here that Zerodha has been leading the movement to offer low-cost, DIY investing. It works on a model of flat brokerage charges and zero-commission direct mutual funds.
Groww also comes from the same league and has been championing direct investing since being launched in 2016 by former Flipkart executives Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal. However, over the years, Groww has also expanded into the wealth management ecosystem and the MF Prime offering is being seen as the extension of the same philosophy.