ALL ABOUT SMALLCASE
WHAT IS SMALLCASE?
Smallcase is an investment platform that permits investors to trade stocks based on certain predefined combinations. It assists investors with baskets of stocks referred to as small cases that are based on certain strategies, ideas or themes. This will be clear with the help of an instance.
Let's suppose you believe in the vision that the future of mobility around the globe is electric and now you wish to invest in those companies that will greatly benefit from the EV boom. If you want to invest passively in the stock market and do not have the necessary time to do a full fledged research or analysis of the EV sector you can easily select a small case known as electric mobility. This will include stocks of major auto component firms, battery manufacturers, transmission companies, power generation, automakers among others. When you opt for this smallcase, your funds get invested in shares of those companies that are expected to grow when there is growth in the EV sector.
As most of the investors are aware, stocks have always delivered higher returns in the long term than other classes of assets. Despite this, many people are still nervous and hesitant to invest in the market due to a variety of factors. The primary aim of smallcase is to assist investors in creating a diversified portfolio of shares for the long run so that the overall risks can be reduced. Owning multiple shares will protect investors from any rapid or unpredictable movements by a particular share. The platform can be used by anyone looking to invest his or her funds in Indian stocks or ETFs for the long run.
WORKING OF SMALLCASE
Opening a broker account is necessary in order to invest in smallcases. Smallcase have partnered with several seasoned broking entities like Zerodha, Edelweiss, Groww, Upstox and HDFC Securities. Since smallcase entails owning the stock of different companies, it also required a demat and trading account. Once the translation is complete, money is debited from the trading account of the investor and in its place shares are credited to their demat account. There is no particular or specific lock in period for these shares, and they can be traded as needed.
MUTUAL FUNDS AND SMALLCASE
1. Cost of investment:
Mutual funds are known to charge up to 0.25 to 2% annual fees on the invested amount as expense ratio. Smallcase also charges a similar amount at the time of initiating the transactions. Hence, smallcase investments carry identical costs and fees and work out to be an equivalent option when compared to mutual funds.
2. No lock in period:
As mentioned, there is no lock in period for smallcase and Mutual funds. Lock in periods are not the case with smallcase as well as mutual funds as investors can exit at any time.
3. Ownership of shares not units:
Smallcase investment makes sure that investors have the ownership of the stocks comprising their portfolio. In the case of funds, investors simply hold units of the portfolio as a whole. This does not create a lot of difference but investors must know the same.
4. Control and Transparency:
Mutual funds disclose the stocks included in the portfolio at a given point of time. On the other hand, smallcase investors can control and see their investments immediately after making investments.
While mutual funds appear hassle free and attractive, they are ideal for everybody out on their investment path. But as an investor who wants to explore more focused investment ideas then smallcase seems a good addition along with mutual funds. A small case can also be utilised along with mutual funds especially when certain strategies or themes are not offered by a particular mutual fund. As with any decision related to investment, it is important to carefully consider all positives and negatives before investing and decide which options suit the goals in the best way.