New Delhi: A public exchange between Zerodha and Groww has reignited the debate over direct versus regular mutual funds, after Zerodha founder and CEO Nithin Kamath questioned platforms that move away from offering only direct plans.
The discussion began with a post by Kamath on X, where he reiterated Zerodha’s long-standing philosophy of keeping investing low-cost. Without naming any company, he said platforms that claim to be “discount” or “low-cost” should not charge percentage-based fees when the cost of executing transactions remains the same.
Kamath recalled that Zerodha introduced its mutual fund platform, Coin, only after it could offer direct mutual fund plans exclusively. He said Coin now manages nearly Rs 1.6 lakh crore in direct mutual fund assets and has helped investors save thousands of crores in commissions.
In a pointed remark, Kamath added that several direct mutual fund platforms launched around the same time as Coin had either shut down or changed their strategy, while the remaining players were also reconsidering their direct-only approach. Although he did not mention Groww by name, the comments came shortly after reports that the company had introduced regular mutual fund plans under its new Groww Prime service.
Groww Clarifies Its Position
Responding to the debate, Groww issued a statement on X, saying there had been “confusion and misinformation” regarding its mutual fund offerings.
The company clarified that direct mutual funds remain its primary offering and that more than 1 crore investors have built investments worth over Rs 1.9 lakh crore through its platform. It emphasised that self-directed investors will continue to have access to commission-free direct mutual funds at no additional cost.
According to Groww, its newly launched MF Prime is an optional service aimed at investors seeking professional guidance, including research-backed recommendations, portfolio reviews and investment advice.
The company stressed that DIY investors would see no changes to their existing experience and rejected suggestions that it had moved away from direct mutual funds.
What Is Groww Prime?
Groww Prime introduces advisory-led investing through regular mutual fund plans for users who voluntarily subscribe to the service.
Unlike direct plans, regular mutual funds include distributor commissions within the expense ratio. While this increases the overall cost to investors, the offering includes personalised investment guidance and portfolio support.
Groww says the service is intended for investors who prefer expert assistance rather than managing investments independently.
Different Investment Philosophies
The exchange highlights two contrasting approaches to wealth management.
Zerodha has consistently promoted self-directed investing through flat brokerage charges and commission-free direct mutual funds, encouraging investors to minimise costs.
Groww, which initially built its business around direct investing, has expanded its offerings to include advisory services for investors seeking a more guided investment experience.
What Investors Should Know
The debate serves as a reminder for investors to understand the differences between direct and regular mutual funds before investing.
Direct mutual funds typically have lower expense ratios because they eliminate distributor commissions, potentially delivering better long-term returns. Regular plans, on the other hand, include commissions but may provide additional advisory and portfolio management services.
The right choice depends on an investor’s financial knowledge, investment goals and preference for managing their portfolio independently or with professional guidance.
