New Index Funds on the Horizon: Groww and Zerodha Take the Lead

Market enthusiasts and investors have something to look forward to as Groww Mutual Fund and Zerodha step into the world of index funds. These asset management companies have recently gained approval from the Securities and Exchange Board of India (SEBI) to introduce new index funds into the market.
Groww Mutual Fund is set to venture into the world of index funds with its inaugural offering, the Groww Nifty Total Market Index Fund. This significant development was shared by Groww's co-founder, Lalit Keshre, who took to social media platform X (formerly Twitter) to announce the news. Groww, founded in 2017, has been making waves in the investment technology sector, providing solutions for various investment avenues, including stockbroking, equity-linked savings, SIPs, IPOs, ETFs, and direct mutual funds. The approval from SEBI marks a significant milestone for the company, opening up new opportunities for both existing and potential investors.
Zerodha, another prominent player in India's financial markets, is not far behind. Just a few days ago, the company submitted draft offer documents to SEBI, signaling its intent to introduce two passive schemes. The first is the Zerodha Tax Saver (ELSS) Nifty Large Midcap 250 Index Fund, and the second is the Zerodha Nifty Large Midcap 250 Index Fund (ZN250). These moves align with Zerodha's strategic goal of establishing a strong presence in the passive investment landscape. As investors increasingly seek out cost-effective and diversified investment options, these offerings are poised to cater to this growing demand.
In September 2021, the Competition Commission of India (CCI) greenlit a significant move by Groww's parent company, Nextbillion Technology Pvt Ltd. This move involved the acquisition of Indiabulls Asset Management Company (AMC) and Indiabulls Trustee Company. For Groww, this acquisition marked a pivotal moment in its journey as an investment technology platform. It has not only expanded the company's reach but has also positioned it as a key player in the evolving financial landscape of India.
Old Bridge Capital Management (OBCM), a distinguished portfolio management firm, is all set to make its mark in the mutual fund industry. OBCM recently received the green light from SEBI to initiate its mutual fund operations under the banner of Old Bridge Mutual Fund. According to Kenneth Andrade, the Founder of OBCM, this approval paves the way for the launch of their maiden actively managed equity scheme. The company's commitment to providing long-term investment solutions reflects the growing opportunities and investor appetite within the mutual fund space.
Adding to the flurry of mutual fund activity, Samir Arora's Helios Capital Asset Management (India) Private Ltd has entered the arena. The company has submitted a scheme information document (SID) to SEBI, marking its debut in the mutual fund sector. While specific details about their offering are yet to emerge, this move signifies Helios Capital's intent to diversify its portfolio and cater to the evolving needs of Indian investors.
In conclusion, these recent developments underscore the dynamism and potential within India's financial markets. As more players, both established and emerging, venture into the mutual fund and index fund space, investors can look forward to a broader range of options and strategies to meet their financial goals. It's an exciting time for those navigating the Indian investment landscape, and the introduction of new funds only adds to the diversity and vibrancy of the market.



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Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
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