Zerodha, a brokerage firm, announced a joint venture with Amazon-backed wealth management firm smallcase to create an asset management company on Wednesday.

The capital markets regulator Sebi has already approved the formation of the joint venture.

"While waiting for our AMC (mutual fund) to be approved, we debated whether we should build it ourselves or collaborate." Given @smallcaseHQ's 6+ years of experience in building investment products, it made perfect sense to form a joint venture (JV) to build the AMC', Nithin Kamath, founder and CEO of Zerodha, tweeted.

He also stated that smallcase will assist Zerodha in developing simple, low-cost passive mutual fund products for investors.

Sebi granted Zerodha preliminary approval to establish an asset management company in September 2021. This followed the company's application for a licence to begin mutual fund operations in February 2020.

The brokerage firm is now awaiting final Sebi approval to begin mutual fund operations.

Vasanth Kamath, CEO and Founder of smallcase, tweeted that he is thrilled to be collaborating with Zerodha to introduce a new generation of investors to mutual funds.

"The upcoming AMC will be a joint venture between Zerodha and smallcase, and will use learnings and shared values from both companies to build an enduring fund house," he tweeted.

At the moment, 42 mutual fund players manage an asset base worth Rs 40.5 lakh crore. Bajaj Finserv Mutual Fund, the most recent entrant, has filed draught documents with the Sebi in order to launch seven schemes in the equity, debt, and hybrid sectors.