The debate over direct versus regular mutual funds intensified on Friday after Hercules Advisors founder Aditya Shah weighed in, calling the argument "just silly" and saying both investment models serve different types of investors.
In a post on X, Shah said Zerodha is able to offer its direct mutual fund platform, Coin, by cross-subsidising it with the substantial profits it earns from its futures and options (F&O) business.
"Zerodha subsidises the Coin platform with the mammoth profits it makes from F&O. Maintaining a direct platform costs money and most platforms don't have the luxury to have this cross-subsidisation," Shah said.
He added that another key objective behind Coin was to keep users within the Zerodha ecosystem.
Shah argued that the direct-versus-regular mutual fund debate overlooks the differing needs of investors.
Zerodha subsidises the Coin platform with the mammoth profits it makes from F&O.
— Aditya Shah (@AdityaD_Shah) July 10, 2026
Maintaining a direct platform costs money and
Most platforms dont have the luxury to have this cross-subsidisation,
Besides the major idea was to keep asses within the zerodha framework,
The… https://t.co/uNmQsC0uya
"The argument between direct and regular mutual funds is just silly. The market exists for both DIY investors and investors who seek advice," he said.
Highlighting the importance of financial guidance, Shah noted that Hercules Advisors has seen senior citizens investing in small-cap mutual funds simply because they believed these were the best-performing investment options, without fully understanding the associated risks.
According to Shah, direct mutual fund plans are best suited for investors who understand their risk profile and asset allocation, while those who require assistance should seek the help of a financial adviser and invest through regular plans.
"India is a large enough market that a place exists for everyone," he added.
ALSO READ: Zerodha-Groww Debate Puts Direct vs Regular Mutual Funds In Focus: What Investors Need To Know
The comments come amid a public exchange between Zerodha and Groww after the latter introduced regular mutual fund plans through its subscription-based Groww Prime platform.
The move drew criticism from Zerodha co-founder and CEO Nithin Kamath, who argued that low-cost brokerages should not encourage investors towards higher-cost regular mutual fund plans.
"You can't call yourself a discount or a low-cost broker if you charge a percentage fee on transactions, because there's no incremental effort in executing a larger order. This logic has informed all our product and pricing decisions from day one. Anyway, Zerodha's Coin today is the largest direct mutual funds platform in India," Kamath said in a post on X on July 9.
Responding to the criticism, Groww said there had been "confusion and misinformation" surrounding its mutual fund strategy. The company clarified that direct mutual funds remain the foundation of its platform and will continue to be available free of cost for do-it-yourself investors who are comfortable managing their own investments, while regular plans are being offered as an option for those seeking professional advice.
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