What is smallcase?

Here at marketfeed, we always promote the concept of long-term investments in the stock market. We believe that all individuals can achieve financial freedom by investing in fundamentally strong stocks over a long period. However, there are certain golden rules that one must follow to excel in this field. You must have a diversified portfolio, ie, own multiple stocks based on market segments and market capitalizations (small-cap, mid-cap, and large-cap). One must also start a Systematic Investment Plan (SIP), through which you can invest small amounts of money into stocks at regular intervals (usually every month). By investing passively, you will be able to gradually build your wealth.

In recent times, investing in the stock markets has become very easy and less time-consuming. Through a revolutionary platform called smallcase, one can easily invest their money in multiple stocks based on a well-defined idea or theme. In this article, learn more about smallcase and find out how it works.

What is smallcase?

smallcase is a simple investment platform that allows you to buy and sell stocks based on certain predefined combinations. It provides users with baskets of stocks (known as smallcases) that are based on certain ideas, strategies, or themes. This will be clear with the help of an example.

Suppose you believe in the idea that the future of mobility in India (and around the world) is electric. And, you wish to invest in those companies that would greatly benefit from the electric vehicle (EV) boom. If you want to passively invest in the stock market and do not have the necessary time to conduct a full-fledged analysis of the EV sector, you can simply select a smallcase known as ‘Electric Mobility’. This would include stocks of major battery manufacturers, auto components firms, power generation & transmission companies, automakers, etc. When you select this smallcase, your money gets invested in stocks of those companies that are expected to grow when there is growth in the EV space. 

As most of you are aware, stocks/equity has always delivered higher returns in the long run than other asset classes. Despite this, many people are still hesitant to invest in the stock market due to a variety of factors. The primary objective of smallcase is to help investors create a diversified portfolio of stocks for the long term so that their overall risks can be minimized. Owning multiple stocks will protect you from any rapid or unpredictable movement by a specific stock. The platform can be used by anyone who is looking to invest in Indian stocks or ETFs for the long term. 

How Does it Work?

You can easily access the smallcase mobile application or website using the credentials used for opening your broking account. [smallcase has partnered with almost all major brokerage platforms such as Zerodha, Upstox, IIFL Securities, 5paisa, etc] Once you are logged in, you can choose from a wide variety of smallcases that are based on different themes or strategies. smallcases are created and managed by professionals that are registered with the Securities and Exchange Board of India (SEBI). The companies (or stocks) included in all smallcases are thoroughly studied and analysed by these professionals. They would explain the reasoning behind the creation of the smallcase and specify the weightage of each stock. The Compounded Annual Growth Rate (CAGR) of every smallcase will be clearly mentioned.

For investing in a smallcase, funds will be used directly from your trading account (Kite, Upstox etc). smallcase is not connected to your bank account. One can either start a Systematic Investment Plan (SIP) or do a lump-sum investment (at one go). [The SIP amount would fluctuate based on market conditions.]

The amount that you have invested goes to different stocks, and you get direct delivery of those stocks in your Demat account. This means that you will have direct ownership of shares, just as in the case of buying individual stocks. The difference here is that with just one or two clicks, you are essentially placing orders for multiple stocks.

smallcase also gives you the option to add or remove stocks based on your own research. You can track the performance of each smallcase and analyse your portfolio. If there are dividends declared on any of the stocks in a smallcase, they will get credited to your bank account. There is no lock-in period, and you can exit a smallcase anytime. Since there is direct delivery of shares, you can sell or exit a particular stock of a smallcase from your brokerage platform whenever you want.

Rebalancing of Stocks in smallcase

The SEBI-registered professionals regularly review or monitor the stocks or ETFs of a smallcase. This is based on quarterly earnings and company news & updates. Most smallcases are rebalanced on a quarterly basis to ensure that the stocks included in them are the right choice for the underlying theme or strategy. If they feel that a stock is not performing up to expectations, they will remove it and add another one in its place.

When this rebalancing takes place, a notification will be sent to the users via email. You can review these changes and easily apply them through the platform. Thus, the stocks that got removed from the smallcase are sold, and the stocks which got added are bought.

Charges for smallcase

For all smallcases available on the platform, a one-time fee of Rs 100 + GST is applicable on the day of purchase. This amount is also applicable if you have created or customised a smallcase based on your own studies or preference. No extra charges will be applicable for further orders in the same smallcase.

• Irrespective of the smallcase type, if you are investing less than Rs 4,000 on the date of purchase, you are charged only 2.5% of the amount invested + GST (18% on fees). That is, if you are investing Rs 2,000, then only Rs 50+GST will be charged instead of the standard Rs 100.
  
• For the All Weather Investing and Smart Beta smallcases, there are no charges for buying and exit. However, there will be a fee of Rs. 50+GST that is applicable for any further order placed in these smallcases.

An important point to be noted is that all regular brokerage charges, taxes, or demat charges for buying and selling stocks will be applicable. (Kindly refer to all charges of your respective broking platforms before investing). On the day of purchasing a smallcase, these charges are automatically deducted from the funds in your trading/broking account. Any capital gains received from selling these shares will also be taxed as usual.

Conclusion

As you can see, smallcase is a very simple and relatively affordable platform that helps you stay invested in stocks (or direct equity) for the long term. The money that you wish to invest is spread across multiple stocks, which helps to minimise risks. All smallcases are explained in simple language, and you can easily track your investments. All Weather Investing and Top 100 Stocks are some of the most popular smallcases available at nominal rates.

The fact that smallcase is backed by brokerage firm Zerodha gives us a sense of safety and trust. At the same time, we would suggest our readers do their own research before investing in smallcases. One must always have a deep and proper understanding of how the market works. However, in the long run, platforms such as smallcase can definitely help you in your investment journey. 

You can learn more about the best investment options for beginners here. Explore smallcase. Also, you can check out some of the smallcases handpicked by our team here.

Happy Investing!