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Zerodha has received the final approvals from the Securities Exchange Board of India (SEBI) to set up an asset management company (AMC), CEO Nithin Kamath posted on X (erstwhile Twitter).

The Zerodha AMC, which will be focused on index funds, is being launched in partnership with Amazon-backed wealth management firm Smallcase with equity traded funds (ETFs) that “all investors can understand”. The AMC will be headed by Vishal Jain who previously worked at Nippon India Mutual Fund.

“Our motivation to start a mutual fund was twofold. The first was that the biggest challenge and opportunity for Indian markets is the shallow participation. Even after all the growth over the last 3 years, we only have maybe 6-8 crore unique mutual fund and equity investors put together,” Kamath wrote on X.

He added, “The second was that if we had to bring in the next ten million investors, they needed simple products they could understand, and mutual funds were a perfect instrument.”

Earlier this April, Zerodha announced it had formed a joint venture with smallcase to launch its AMC, citing the latter’s over six years of experience in building investment products.

Online brokerage firm Zerodha received SEBI’s in-principle approval to start its AMC in September 2021, after the company applied for a licence to start mutual fund operations in February 2020. This was to help it expand its investment horizons and tap into the passive investor class.