MUMBAI – Buoyed by the overwhelming response to the funds launched by Zerodha Fund House, its partner smallcase is excited about the partnership and the duo are focussing on launching new products and solutions for retail investors.

“We are building it in a very unique manner being India’s only passive-only fund house and providing only direct plans digitally for individual investors. The focus for the next 2 quarters will be to launch a core set of products that can form the building blocks for every investors’ portfolio,” said Vasanth Kamath, founder and CEO of wealthtech platform, smallcase.

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Through an ecosystem approach, smallcase is building its platform that would help Zerodha Fund House co-create alongside the industry.

Edited excerpts from an interview with ETMarkets:

With markets seeing a strong bull run, how was 2023 for the smallcase platform?
2023 has been a year of continued growth for the smallcase platform across all key metrics, including a 30% growth in the user base and we are soon to touch 10 million in count.

We saw a 50% growth in inflows and amount transacted, with the latter crossing a cumulative amount of Rs 65000 crore since the launch in 2016. Aided by the rally in the markets, the assets on the platform have more than doubled in 2023, and we expanded our growing ecosystem with new partners across brokerages, RAs, RIAs, wealth & fintech platforms. What are the key factors that will influence investor behaviour in the near to medium term?
The triggers for the market this year would include political and geo-political events across the world. Domestically, the General Elections and its outcome and impact on economic policies would be a key factor for how the markets will react.

Interest rate hikes in the US and more than half the world heading to the polls will be the important global events to watch out for.

There is no doubt that retail investors have emerged as the new bull of Dalal Street. But over the last one year, have you seen any visible difference in their behaviour?
Last year, we saw an increase in discipline in the smallcase investor base with sustained inflows through the SIP mode compared to the previous year.

Retail investors have also become more educated about diversification at an overall portfolio level and understanding the exposures they’re taking along with their respective risk profiles. There has also been a shift in allocation preferences to factors like momentum and growth and focused themes like ESG, manufacturing.

Ushering in the new year, what different do you plan to do to further nurture retail investment?
Our focus in 2024 would be to continue expanding the offerings in our endeavour to make smallcase a multi-asset platform.

We will soon be launching mutual funds which can enable more use-cases like debt and tax-saving with smallcases. We have also received a lot of interest from our users to introduce fixed income assets in the smallcase format.

More broadly, we also want users to look at their portfolio in terms of their overall net worth, so they can make more informed decisions about their allocations and choices within their assets and liabilities. We will be launching more tools in the later part of the year towards this.

Given that 2024 is event-heavy, starting with general elections, what kind of portfolio allocation strategy can work out for new investors?
Irrespective of events, it is always prudent for investors to have a plan around allocation mix across equity, fixed income, commodities and other asset classes, and to keep reviewing these on a regular basis.

You recently joined hands with India’s largest discount broking firm. Tell us a bit about the response so far for Zerodha AMC?
The response to Zerodha Fund House (ZFH) has been very encouraging and positive so far. We are building it in a very unique manner being India’s only passive-only fund house and providing only direct plans digitally for individual investors.

It is still early days for ZFH and we are launching our 3rd scheme – India’s first Growth Liquid ETF soon. The focus for the next 2 quarters will be to launch a core set of products that can form the building blocks for every investors’ portfolio.

Under this partnership, what is smallcase planning to offer and what’s the business strategy?
smallcase has the experience & expertise of enabling investment products for retail investors at scale, which helps ZFH launch relevant funds & solutions. We have taken an ecosystem approach to building our platform that would also come in handy for ZFH to co-create alongside the industry. Our learnings from investors such as their appreciation for transparency and simplicity will be core values for ZFH also.

You have also recently entered the LAMF segment. What is the strategy behind entering this space?
The foray into offering secured credit options was supported by the feedback we received from our user base. Today’s retail investors understand they should have a long horizon when investing in equities.

As a long-term investing platform, we wanted to provide a cost-effective solution for users to be able to access a low-interest credit line against their portfolio so they can fulfil their liquidity requirements without disturbing their asset allocation.

As financialization of savings continues, we remain optimistic about secured loans becoming an important part of every investor’s toolkit.

What’s your expansion plan for the next 1-2 years, and will you require fresh funding?
We will continue on our mission to help every Indian build better long-term portfolios with smallcases and new products. We are well-capitalized to build this business and platform for the long term.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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