What is Smallcase? How to Invest in Smallcase?

What Is Smallcase And How Does It Work?

5 Min Read |  April 13, 2021

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Innovation and up-gradation are key requirements for thriving in any field. 

So, the world of investing should also not be sheltered by the light of innovation. Thanks to companies like Smallcase Technologies who have created space for modern and keen investors to explore new avenues of investments. 

When it comes to investing, the more professional guidance and diversification you opt for, the better it gets for you. And, who doesn’t wish for a smooth ride and good returns when it comes to the stock market? 

Everyone! 

The word Smallcase seems unfamiliar. Want to know more? Here you go! 

Decoding the Term Smallcase

Before we dig into the information about the Smallcase company, let us first understand the meaning of the term ‘smallcase.’

The concept of smallcase investment revolves around choosing a basket of such stocks or even ETFs that collectively emanate an objective. Here, the themes are ready-made and some examples of the same are banking magnates, rural demand, wealth compounders of India, smart cities etc. 

Generally, this weighted basket consists of around 50 stocks and it can surely be categorised as a modern investing product. The next query that arises here is the focal point of this kind of investing. So, the idea of smallcase is generally centred around the following points: 

  • Certain financial model

  • Any trend that is surging is the market and among the investors. 

  • Having portfolios that reflect various levels of risks like balance, aggression, etc.  

Remember that as an investor, the final decision as far as selecting a theme for smallcase investing is yours. For instance, if you are optimistic about the pharma industry doing very well in the upcoming days, then you can proceed with this idea. Go ahead and buy a portfolio of curated pharma stocks in focus and manage it with ease. 

If you are going with smallcase investment, it does not imply that you are taking recommendations about investment from anyone. In the end, the decision to choose a basket of stocks or ETFs lies in your hand. 

Thus, the concept of smallcase should be mistaken as a tool to advise investors. 

Availability of Stocks for Smallcase

I am sure you would be wondering if all the stocks are available for smallcase investing, right? 

Well, at present, the stocks listed on NSE can be picked while creating and fine-tuning the portfolio. One point to be noted here is that the stocks that you buy or sell for smallcases usually get reflected on the following day. The selection of the stocks is done with a rigorous research procedure and the selected pool of stocks or ETFs always represent an objective. 

Is Smallcase Better than Mutual Fund? 

Once you encounter words like ‘basket’ or ‘pool of stocks’, most of you must be wondering if the notion of smallcase and mutual fund is similar. 

Well, let me tell you, these two investment avenues are not similar. The points of difference can be understood with the help of the table below.

I hope now you will not get confused with these two investment avenues. This is because in terms of usability these are not identical. 

Also, whether it be mutual funds or smallcases, they have altogether different functionality. It is up to you as an investor and your investment wants, to decide which path to take. Thus, the basis of comparing as to which is better does not apply. 

Smallcase Technologies 

I will begin this section by asking you readers a question! 

What are the top ways to invest in the stock market? 

Some of you would probably say classic options like

  • investing in particular stock through brokers

  • or investing through the route of exchange-traded funds or equity funds

What if I tell you that there is another way as well?

Intrigued? 

With the concept of smallcase (as explained in the former section) some broking firms now provide you with a unique option of buying a portfolio in one go. 

Wait! These portfolios are not just anything normal but are formulated by putting in such similar stocks together. 

Let us understand this with an example here. 

In the year 2021, Elon Musk has announced that Tesla will be foraying into the Indian markets. This announcement has made it clear that in near future, electric cars or bikes will see a boom in our country. The demand will increase and will directly benefit the companies working in this industry. Thus, this sector is expected to generate merry returns in future. 

But, which particular company should you invest in? 

The experts will be able to do the analysis but what about investors who do not have such expertise? 

Well, it is in situations like this when the services provided by Smallcase Technologies comes into the picture. 

You know that the theme of electric vehicles would work, right? 

Simply visit the website and buy a portfolio that has been created around this idea and you will be sorted. 

Founded by Vasanth Kamath, the start-up is based in the city of Bengaluru. By offering tailored or ready-made portfolios Smallcase Technologies is giving an opportunity to make a long-term, cost-effective as well as a diversified investment. The portfolio selection is managed by professionals who are licensed by SEBI. 

Who are the Different Smallcase Partners?

At present, Smallcase has collaborated with 7 companies so as to make their services available to as many investors as possible.

  • Zerodha

  • Kotak Securities

  • HDFC Securities

  • 5Paisa

  • Edelweiss

  • Alice Blue

  • Axis Securities

Any of you who use the services of the above-mentioned firms can easily invest in the theme-based portfolios provided by Smallcase. You don’t even require a separate account – you can invest in Smallcase directly through your Demat account.

Answering the Million Dollar Query: How Does It Work? 

As mentioned before that the portfolios provided by Smallcase are curated around a predefined blend of stocks. 

So, if you are getting such an opportunity where your work of analysing each sector, then a particular company reduces, then why not grab it?

You can understand how to use it by going through the following step-wise explanation: 

1. Simply visit the website and begin by smallcase login. You can retrieve the credentials from your broker (any of the 7 firms mentioned in the former section) 

2. After logging in, you will be able to spot 4 broad categories namely - All Weather Investing, Smart Beta, Thematic & Sectorial, Model-based. 

  • All-Weather Investing – In the all-weather investing category, the portfolios are designed with the idea to dodge the highs or lows in the stock market. It is rather a safer option that will help you sail through the high waves taking place in the market.

  • Smart Beta – This category consists of portfolios built primarily with blue-chip stocks. Some themes available are - Low Risk- Smart Beta. Quality Smart Beta, etc. 

  • Thematic & Sectorial: Through this category, you can invest in portfolios that are designed with a long-term investment perspective and they bet on some disruption ideas that are likely to work in the coming future. 

Some themes available are - The Great Indian Middle Class, Electric Mobility, Brand Value, etc.

  • Model-Based: Under this category, you can avail portfolios that are created on the basis of either investment strategies formulated by top-notch investors or the fundamentals like PE ratio, dividend, etc. 

Some themes are - Magic Formulas, Growth & Income, Value & Momentum. 

3. You can easily see which stocks are included in a portfolio and what the reason for including that particular stock is. Please note that you can customise the smallcase portfolios by either deleting or adding a stock. 

4. Once you have decided as to which smallcase portfolio you want to proceed with, select it and you will be directed to the payment section. Pay the required charges (mentioned against the given portfolio). 

5. After you have made the payment, the concerned broker will make the buy order of all the stocks present in the selected portfolio. 

Are these steps tough to follow? 

No! 

Then invest in good stocks with Smallcase!   

Is Smallcase Good For Investment? 

Take a look at the 3-year returns given by certain theme-based smallcases- 

(*Source of data - Economic Times & As of 2019)

Each of you who invests in the market through some or the other, will not necessarily be an expert in this field. A great deal of research, analysis and time goes into identifying the right stocks that fit with your requirements as well as the risk appetite. 

You can, of course, go down the path of mutual funds for convenience and safety but they are comparatively costlier and you will not have the flexibility to operate the composition of the portfolio. 

Thus, if you consider all these factors then smallcase investment is a great tool and is surely worth giving a try. 


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