Zerodha vs Groww: Nithin Kamath's Dig Sparks Public Spat Over Mutual Funds

It began with a seemingly routine post by Zerodha founder and CEO Nithin Kamath on X. Within hours, Groww hit back with a detailed clarification. What followed was a rare public exchange between two companies that together serve millions of Indian investors.

At the heart of the debate was a simple question: Should online investment platforms stick only to direct mutual funds, or is there room for regular plans with advisory services?

Kamath's Swipe Without Naming Groww

Kamath revisited Zerodha's founding philosophy, saying the company has always believed customers should not pay more simply because they invest larger amounts. "When we started the discount brokerage model in 2010, we decided to charge the same fee regardless of trade size," he wrote on X.

He extended the same logic to mutual funds, saying Zerodha launched its Coin platform only after it could offer direct mutual fund plans exclusively.

Kamath argued that platforms cannot claim to be "discount" or "low-cost" if they charge percentage-based fees where the effort to execute transactions remains the same.

He also highlighted Coin's scale, saying the platform now manages nearly Rs 1.6 lakh crore in direct mutual fund assets and has helped customers save "thousands of crores" in commissions.

The sharpest line, however, came later.

Kamath said many direct mutual fund platforms launched alongside Coin had either "disappeared or pivoted," while "the few remaining platforms are also rethinking their choice of offering direct plans."

He didn't mention Groww by name. But the timing left little room for doubt. The remarks came just days after reports claimed that Groww had started offering regular mutual funds under its new Groww Prime offering.  

Photo Credit: Posted On X By Nithin Kamath

Groww Responds: 'Nothing Changes'

Groww responded with its own post on X, saying there had been "confusion and misinformation" about its mutual fund offering.

The company made one thing clear. "Direct mutual funds are, and will remain, the heart of Groww."

Groww said more than 1 crore investors have built over Rs 1.9 lakh crore worth of mutual fund investments on its platform, making it India's largest mutual fund platform.

The company stressed that DIY investors will continue to get direct mutual funds free of cost and with zero commission.

According to Groww, the newly launched MF Prime is not a replacement for direct plans but an optional product aimed at investors who want research-backed recommendations, portfolio reviews and guidance on buying, holding or exiting investments.

"If you are a DIY customer on Groww today, nothing changes," the company said, adding that any suggestion that it had abandoned direct mutual funds was "simply incorrect."  

What Exactly Is Groww Prime?

Unlike the company's traditional platform, which focused exclusively on direct mutual funds, Groww Prime offers advisory-led investing that includes regular mutual fund plans for users who opt in voluntarily.

Regular plans carry distributor commissions built into the expense ratio. Direct plans do not. Over long investment horizons, those lower costs can make a meaningful difference to returns.

Groww maintains that Prime is designed for investors who want professional guidance rather than a self-directed investing experience, while its core direct mutual fund offering remains unchanged.  

A Clash Of Business Models

The public exchange, say experts, reflects two different philosophies of wealth creation.

Zerodha has consistently positioned itself as a champion of low-cost, self-directed investing. Its business model revolves around flat brokerage charges and commission-free direct mutual funds.

Meanwhile, Groww, founded in 2016 by former Flipkart executives Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal, built its popularity on the same direct-investing approach before expanding into a wider wealth management ecosystem.

With Prime, Groww is now trying to cater to investors who are willing to pay indirectly through regular plans in exchange for research and portfolio guidance.

What It Means For Investors

For investors, the online exchange serves as a timely reminder to understand what they are signing up for.

Direct mutual funds generally have lower expense ratios because they eliminate distributor commissions. Regular plans include those commissions but may come bundled with advisory or distribution services.

The choice ultimately depends on whether an investor prefers to make investment decisions independently or wants professional guidance.