'3 months, Rs 500 crore, 1 lakh investors': Kamath brothers' Zerodha Fund House is off to a flying start

Zerodha Fund House CEO Vishal Jain has said the fund reached the milestone of Rs 500 crore AUM in just three months since its launch in October 2023. The fund has also drawn an impressive 1 lakh investors in the short span of time.   

"Three months, Rs 500 crores, 1 lakh investors is what we've reached - first milestone of ours. We hope that this base goes on and we're able to achieve greater heights as we move ahead," Jain said in the podcast GrowthX on YouTube. 

Jain believes the Indian market is heavily underpenetrated when it comes to mutual funds and there's a big opportunity for fund houses to make a foray. 

"The industry is heavily tilted towards building products and processes for institutional investors and HNIs. There is still a huge population out there which you need to cater to. I don't think that having 42 AMCs (Asset Management Companies) is too large. I think the population that you have not targeted is so huge that even if more people come into the market, I think they'll still be small," he explained.

Jain flagged key metrics indicative of the size of the Indian market. "To throw some numbers at you. There are over 50 crore people who have linked their PAN with Aadhaar. There are 10 crore people, last when I saw, who have invested in crypto. There are 80 crore people using e-commerce. So, there are people using a lot of stuff online, consuming a lot of things online but they don't seem to be buying mutual funds at that pace," he added.

According to Jain, simplicity has to be at the centre for mutual fund products to see success. 

"We think that if you're able to simplify the entire process, if you're able to build the right kind of journey for these investors, we think that's how penetration will start happening. That's what we want to focus on and we are focusing on in the organisation," he said.

He also shared data-driven insights from Zerodha Fund House. "I'll give you a few dynamics about the kind of investors that are investing. The average age group is between 25 and 35 years old. We're getting nearly 35% of our investors coming in from very small towns. We are seeing repeat purchases happening day in and day out from investors," he said. 

He cited the success of the Indian government's financial inclusion programme, the Jan Dhan Yojana, under which over 50 crore bank accounts have been opened as another indicator of the market size. 

"There is a market out there to be tapped and it's extremely important that for you to be able to talk to them. To reach out to them, you have to simplify the product, otherwise you're not going to have conversion."

He shared the ambitious targets Zerodha Fund House hopes to achieve in the future. "Very early days to give you numbers, but to me a 1 lakh crore AUM, having at least four to five crore investors would be something that would mark a great achievement from our side," he said.

Zerodha Fund House is the fund management arm of stock broking platform Zerodha founded by brothers Nikhil Kamath and Nithin Kamath. The fund house is focussed on offering passive investment products, specifically index funds and exchange-traded funds (ETFs).