Zerodha to bring mutual funds to Kite soon: What investors need to know about the upcoming feature

Neelesh Verma, head of mutual funds at Zerodha, said the company plans to enable direct mutual fund investments through its Kite app within the next few months. Currently, users can view their mutual fund holdings on Kite but need to switch to the separate Coin app to make purchases.

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Zerodha plans mutual fund investing on Kite

Kite is primarily used for active stock investing and trading, while Coin caters to passive, long-term investments such as mutual funds, SIPs, NPS and fixed deposits. Bringing mutual fund investing to Kite is designed for users who want to manage stocks, mutual funds, and other investments through a single app.

Kite currently has more than 1 crore downloads and over 65 lakh active investors. Coin, meanwhile, has more than 50 lakh downloads.

"It will be a user-friendly experience because we do see investors who want everything on one app. We are also bringing a feature where customers can import all their mutual fund investments elsewhere to Zerodha on Kite," Verma was quoted as saying by Moneycontrol.

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Coin will remain focused on passive investments

The move does not mean Zerodha is doing away with the distinction between active and passive investing. Coin will continue to operate as a platform focused on passive investments.

"It is not like we are removing the active and the passive bifurcation that we had, but what we are doing is bringing in an option to customers. Coin will always be the passive-only platform where mutual funds will always be the core of it," Verma said.

Zerodha expands mutual fund business

The integration could help Zerodha further grow its mutual fund business. The company currently has more than 3 million mutual fund investors and 5.6 million SIP accounts.

Zerodha has also recently launched the Zerodha Arbitrage Fund, an open-ended equity scheme that seeks to generate returns from price differences between the cash and futures markets.

Zerodha's focus on direct mutual funds

Zerodha has long positioned its mutual fund business around direct plans, which do not involve distributor commissions and are generally cheaper for investors than regular plans.

Founder Nithin Kamath has said Zerodha will continue to offer direct mutual funds for free, in line with the company's low-cost discount-broking model.

The company launched Coin only after it could offer direct mutual fund plans rather than regular ones. Kamath has argued that percentage-based fees can significantly reduce investor returns over the long term because of the impact of compounding.

Coin manages nearly ₹1.6 lakh crore in assets

Coin has since become one of India's largest direct mutual fund platforms, with nearly ₹1.6 lakh crore in direct mutual fund assets under management.

Zerodha has also said its customers have collectively saved thousands of crores in distributor commissions by investing through direct plans.

At present, Zerodha offers only direct mutual funds, meaning investors need to research and select funds themselves.

Regular mutual funds, by comparison, pay commissions to distributors such as wealth management firms, portfolio management services (PMS) and stockbroking platforms. These intermediaries typically recommend funds to customers while earning commissions for their distribution.