In December 2020, the Securities and Exchange Board of India (Sebi) sparked off a gold rush in India’s mutual funds space. The market regulator eased entry norms eased entry norms Livemint Sebi eases profitability criteria for mutual fund sponsors Read more for becoming a mutual fund sponsor—a person or entity that can set up a mutual fund. Its earlier entry barrier, being profitable for three of the preceding five years (including the most recent one), was withdrawn. Instead, interested parties need only show a net worth of Rs 100 crore ($13.7 million).
Zerodha, Navi, and the new wave disrupting mutual funds with passive aggression
From India’s largest stockbroking platform to India’s largest mutual fund distributor, a host of companies want to shake up India’s $444 billion mutual funds industry. Their strategy? Passive funds—a type of mutual fund that has seen great success overseas but has found little love in India
An underpenetrated market and easier entry norms are drawing many to the mutual funds business
But competition is tough, a few top players dominate, and profitability is long and hard to come by
To break through, several new players plan to focus on passive funds and their variants. These offerings have been a runaway success in foreign markets
The passive market in India is still nascent though, and even as new firms try and differentiate from each other, existing players are also eyeing the space