ZFunds Launches US Stocks and ETFs Access for Distributors and Clients

ZFunds, a business-to-business platform designed for mutual fund distributors and wealth managers, announced on October 22 the launch of US stocks and exchange-traded funds (ETFs) on its platform. Unlike typical do-it-yourself investing apps, ZFunds offers distributors the ability to onboard clients, guide their investment choices in international securities, and generate brokerage revenue.

Established in 2019 by Manish Kothari and Vidhi Tuteja, ZFunds integrates various investment products into a single app accessible to both distributors and their clients. The platform already supports mutual funds, portfolio management services (PMS), alternative investment funds (AIFs), and fixed deposits. The recent addition of US stocks and ETFs marks a significant expansion of its offerings to include global assets.

The platform charges a brokerage fee of 0.3% per trade, which can decrease to 0.1% for clients with larger transaction volumes. Brokerage services are provided through ViewTrade, an underlying broker that facilitates access to US markets. The minimum transfer amount for investing in these international products is $100. ZFunds also ensures full regulatory and tax compliance by providing ready-to-upload forms, including Schedule FA, which is essential for tax reporting.

In a telephonic interview with Vedant Vichare, Manish Kothari explained the platform’s unique position in the market. Since the launch, ZFunds has opened approximately 5,000 accounts without any dedicated marketing efforts, indicating strong demand from both distributors and investors.

Kothari highlighted that unlike existing platforms that primarily target retail investors through a DIY approach, ZFunds empowers distributors to build their own client base for international investments. "We are the only platform offering this model," he stated. This approach allows distributors to expand their business beyond traditional domestic offerings.

Distributors interested in international investments do not need to be existing ZFunds partners. Many new partners have joined specifically to provide access to US stocks and ETFs, with the possibility to later offer the full suite of ZFunds products. This flexibility appeals to distributors transitioning from both conventional and newer platforms.

The rise in demand for international investing is influenced by regulatory constraints in India. For example, international feeder mutual funds have closed to new subscriptions, and the investment ecosystem at Gujarat International Finance Tec-City (GIFT City) remains under development. While GIFT City products are accessible through some platforms, investors often face challenges redeeming these investments efficiently.

Direct investment in US stocks and ETFs offers faster transaction cycles. Once funds are transferred to the account, securities can be bought or sold with proceeds credited immediately to the wallet, enabling quick reinvestment. This speed contrasts with the slower processes associated with mutual funds or GIFT City products.

The diversity of investment options available on ZFunds is considerably broader than what is typically offered in India. Investors can access US-listed gold ETFs, bond ETFs, Treasury bill ETFs, and thematic ETFs focused on sectors such as artificial intelligence, semiconductors, clean energy, water, and oncology. Additionally, country-specific ETFs cover markets like China, Japan, Brazil, and other emerging economies. For those seeking low-risk, dollar-denominated returns, US Treasuries provide an option unmatched by Indian products.

Looking ahead, ZFunds plans to introduce Undertakings for Collective Investment in Transferable Securities (UCITS) funds. These European-regulated funds will allow investors to gain exposure to other international markets without investing directly in US-listed ETFs. Wealth managers familiar with UCITS funds will find this addition useful for diversifying client portfolios.

Regarding fees, the platform’s brokerage is competitive, with most revenue directed to the distributor or wealth manager offering personalized services. Currency conversion charges are set by banks and payment partners, not ZFunds. Kothari shared his personal experience transferring funds through the platform, noting a currency conversion spread of approximately 0.6 to 0.7%, which is relatively low.

Retail investors can open accounts directly via ZFunds’ client application. After registration, a team member contacts the investor to assess their needs and assigns a wealth manager based on criteria such as tenure with ZFunds, client load, training progress, and geographic location. This personalized approach aims to enhance investor support and guidance.

ZFunds’ expansion into US stocks and ETFs represents a notable development in India’s wealth management space, catering to growing interest in global assets. By enabling distributors to actively manage international portfolios for their clients, the platform bridges a gap between domestic investment products and global markets. This move aligns with broader trends of increasing investor appetite for diversified portfolios featuring international exposure.