Daybreak
Zerodha and Groww wanted to disrupt mutual funds. But they're stuck in first gear
Apr 8, 2025
In this discussion, Arshish Mayer, a colleague at The Ken who closely follows investment trends, dives into the struggles of Zerodha, Groww, and Navi in disrupting India's mutual fund sector. He analyzes why the anticipated boom of passive investing hasn't materialized as expected, despite its success in the U.S. Mayer highlights the challenges new players face against established firms and the complex landscape that complicates investor choices. The conversation reveals insights into the future of passive funds and the evolving strategies needed for success.
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Quick takeaways
- New entrants like Zerodha and Groww struggle to penetrate India's mutual fund market, facing challenges from established players and investor preferences.
- The anticipated arrival of Jio BlackRock may disrupt existing competition, particularly in the active fund segment, impacting future market dynamics.
Deep dives
Disruption in the Mutual Fund Industry
New entrants in India's mutual fund industry, such as Navi, Zerodha, and Grow, aim to disrupt the market dominated by traditional fund houses by focusing on passive funds. These firms launched numerous new fund offers (NFOs) with predominantly passive investment strategies, hoping to mirror the success of passive funds in the U.S., which have outperformed active funds in assets under management. In the last few years, passive funds have tripled in size in India, but they still only make up a small fraction of the total mutual fund market. The ambition to create a Vanguard-style investment model in India faces significant challenges, as the growth of passive funds has been slow compared to expectations.
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