Fintech major Groww has strongly defended its business model after facing criticism from Zerodha's founder Nithin Kamath, who took aim at rival platforms for abandoning their original commitment to direct mutual funds. Addressing the controversy on X (formerly Twitter), Groww stated 'We've seen some confusion and some misinformation about Groww's mutual fund offering. So let us be unambiguous.' The platform clarified that direct mutual funds remain the core of its offering and will remain entirely free for Do-It-Yourself (DIY) investors, with the company emphasizing that 'For every DIY investor, Groww stays exactly what it has always been: direct, zero-commission, and free. Forever.'
According to Groww's official statement, over 10 million investors have built more than ₹1.9 lakh crore of mutual fund investments on their platform, making Groww the largest mutual fund platform in the country. The company's approach focuses on direct plans that do not carry distributor commissions, while regular plans include commissions that can reduce investor returns over time. Groww noted that customers have saved 'thousands of crores' in commissions by investing through direct plans, with the difference becoming meaningful over long holding periods due to compounding effects. As reported by The Hindu BusinessLine, Groww has assured that 'For every DIY investor, Groww stays exactly what it has always been: direct, zero-commission, and free. Forever.'
In its latest development, Groww has officially launched MF Prime, an opt-in feature designed for investors seeking guidance on mutual fund portfolio management. The company began piloting MF Prime with a small group of users in January and has now started a wider rollout following what it described as an encouraging response. According to The Hindu BusinessLine, customers who opt into MF Prime will have their future mutual fund investments made through regular plans, while their existing investments will remain in direct plans. Users can also switch back to direct plans through the app's settings. The platform emphasized that 'Some investors want to do it themselves. Some want guidance. We're proud to serve both - and to let the customer, not the platform, decide.'
MF Prime combines recommendations from Groww's in-house research team with an artificial intelligence engine that evaluates mutual funds based on performance, risk and suitability. The service provides buy, hold, exit and portfolio rebalancing recommendations based on an investor's financial goals, risk appetite and investment horizon. As reported by The Hindu BusinessLine, the product was introduced in response to demand from users seeking investment guidance, while maintaining its existing direct mutual fund offering for self-directed investors. This dual approach allows the platform to serve both types of investors while maintaining its core commitment to zero-commission direct plans.
The controversy highlights the ongoing challenges in the direct mutual fund space, where platforms face difficulty monetizing services that don't generate distributor commissions. As reported by CNBC TV18, Zerodha's founder Nithin Kamath had previously highlighted that direct mutual funds are popular with investors because they are cheaper, but difficult for platforms to monetise. Groww's response comes as several platforms that started with the same direct mutual fund model have either shut down, changed direction, or are rethinking the business, with Kamath noting that a broker cannot call itself low-cost if it charges a percentage fee on transactions. Groww without naming Zerodha or Kamath, stated there had been 'confusion' and 'misinformation' about its mutual fund offering.
The mutual fund industry is positioned for significant growth, with AMFI CEO Venkat N. Chalasani expecting India's mutual fund industry to reach 10 crore investors and ₹150 lakh crore in AUM by 2030. As reported by The Economic Times, he credited resilient SIP flows, rising B-30 participation, regulatory reforms and growing financial awareness for the industry's structural transformation. This growth trajectory provides a positive backdrop for platforms like Groww that focus on direct mutual fund offerings, as the sector continues to expand and attract new investors seeking cost-effective investment options.
