Brothers Nithin Kamath and Nikhil Kamath, have made their debut in Forbes’ list of 100 richest Indians. They are the founders of Zerodha, India’s biggest stock brokerage company in volume of trade and of True Beacon. True Beacon is an asset management company (AMC). The company’s total net worth stands at $1.55 billion.
The inception of Zerodha
The Kamath brothers started India’s first online discount brokerage firm Zerodha in 2010 with a team of five people. Interestingly, the name Zerodha combines ‘Zero’ and ‘Rodha’, meaning barrier in Sanskrit. Initially the startup used to focus on day traders. Since then, the brothers have experienced an exponential growth. Harbouring 22 lakh active users, the platform makes over five million trades every day. “Our disruptive pricing models and in-house technology have made us the biggest stock broker in India in terms of active retail clients.” said the company.
Zerodha deals in trading
Zerodha presents trading in equities, bonds, currencies, commodities and mutual funds. An investor has to spend Rs 300 to open an account in Zerodha. The equity delivery investments are free. Securities transaction tax is charged according to equity delivery, equity intraday, futures and options. It charges a flat fee of Rs 20 for every trade, irrespective of its size with no brokerage fee. It has been adding nearly 2 lakh accounts every month.
Kamath brothers’ entry into Forbes’ list of 100 richest Indians
To empower retail traders and investors, Zerodha runs a number of popular open online educational and community initiatives. The company launched Varsity, a learning module to educate the young investors. It also runs Trading Q&A, an active forum were traders and investors, can discuss stock ideas. Moreover they have ‘Z Connect’ which is an interactive blog.
Besides Zerodha, Kamath brothers founded an investment management firm True Beacon. It focuses on ultra-high net worth investors and operates on a zero-fee model. The AMC does not charge an account opening fee, redemption fee, and maintenance fee. It charges a 10% performance fee on the gains at the end of the financial year from the investor.
Trading in the pandemic
Most discount brokerages have reported a sudden increase in the opening of new demat accounts during COVID-19. At Zerodha, the number of demat accounts opened from January to May excelled the overall client growth figures of last year. Nikhil Kamath said the average age of these new investors has dropped to 30 and the average ticket size is about Rs 80,000.
“Retail investors, after a long time, seem to have come into the markets after a crash, buying large-cap bluechip equity amidst the fall in between 8000-9000 Nifty and are seeing substantial returns. This is a big positive for the ecosystem overall and could lead to increased participation from retail in the days to come.” said Nkhil Kamath.
Knowing the Kamath brothers
In an article titled “The Aligned Mind” Gayatri Jayaraman writes, “ Discipline and structure are more important than even access to information and money flow. This statement is according to co-founder and CIO of Zerodha and True Beacon, 34-year-old billionaire Nikhil Kamath. Yet, structure is exactly what he renounced when he exited formal education to play competitive chess at the age of 15. He detests volatility in his personal sphere, loves it in the market place. He’s an outcome of capitalism, but advocates for taxing the excesses of wealth. His older brother Nithin has called him a better trader than himself, and as loud as his trades speak, he’s the soft-spoken, self-effacing one.”
“Chess teaches you structure, you have to work within a set of rules and be creative within that. It teaches you how disciplined you need to be, in business or anything else. And trading is a very humbling experience. The minute you know or think you know what is going to happen tomorrow it hits you on the head and corrects you.” Nikhil says.
While Nikhil is very vocal Nithin’s LinkedIn profile reflects his crisp manner of words. His bio reads, “Over a decade of trading the markets for a living. Felt the fatigue, and with Zerodha decided to be the catalyst for change and started a brokerage firm that traders didn’t have.”