Smallcase is an innovative and modern financial instrument comprising of a portfolio or a basket of stocks or Exchange Traded Funds (ETFs) that are based on an underlying theme or objective or a strategy.
The smallcase was introduced by Bengaluru based company called Smallcase Technologies (founded by three friends from IIT, Kharagpur – Vasanth Kamath, Anugrah Shrivastava, and, Rohan Gupta).
Why Invest in Smallcase?
Smallcase is considered as a safer route to invest in the stock market. Investing in smallcase offers the following advantages:
- Smallcase is a transparent and professionally researched financial instrument. At one shot, we can invest in multiple stocks. Also, the investor can view the portfolio whenever he or she wants (track the smallcase anywhere and anytime).
- We can diversify the investment i.e. through investing in smallcase; an investor can invest in multiple stocks. This protects the investor against the volatility of a specific stock.
- In smallcase, there is no lock-in period and we can earn the dividends directly into our bank accounts.
- Smallcase is customizable. It often allows the investor to create a portfolio of stocks as per their likes and dislikes, thus enhancing the ability of the investor to influence the return from the investment.
- In smallcase, there are zero management fees. Unlike mutual funds, in smallcase, we need to pay only when we transact. The transactions will only have the usual brokerage fees and not any other additional fees. Hence, the expense ratio is low for smallcase.
- Smallcase rebalances itself at regular intervals (say quarterly). This ensures that the investor sells or buys the stocks at the right time according to the underlying theme of the smallcase.
How to Invest?
Smallcase is mostly considered as a long term investment. SIP option is also available in smallcase.
Before investing in a smallcase, the investor needs to have a trading account and a Demat account with a partner stockbroker. As of now, nine brokers (in collaboration with the Smallcase Technologies) are offering the smallcase platform. They are:
- Zerodha
- HDFC Securities
- Kotak Securities
- Edelweiss
- 5paisa
- Axis Securities
- Alice Blue
- IIFL Securities and
- Trustline
What are the Types of Smallcase?
The following are the different types of smallcase:
- Smart Beta smallcases are large cap-focused which allows the investor to invest in high-quality, large-cap companies.
- Thematic smallcases, based on a specific market theme, like the ‘Rising Rural Demand’ smallcase which consists of companies that are going to benefit from increasing rural consumption.
- Model-based smallcases, based on a particular fundamental or technical factor (dividends, zero debt, earnings growth, etc.) like ‘Dividend Aristocrats’ which has stocks of companies that have been consistently increasing dividends for the last 10 years.
- Sector trackers – are smallcase that can be used to track entire sectors in one shot, like ‘FMCG Tracker’ smallcase which allows efficiently track and invest in the FMCG sector
However, the smallcase investors have to remember always that being thematic, this smallcase avenue is more suited to savvy investors who can keep track of trends and clearly understand the underlying themes of the smallcase.
