What Is Smallcase and How Does It Work

1. What Is Smallcase and How Does It Work? Smallcases infuse a portfolio-driven approach to investing; individual stock units will be credited to your Demat account once you make a purchase. This is not the case with respect to a mutual fund, where you gain access to the aggregated fund alone and not the underlying companies. For a long time, finance was an idea, like art. It then became a commodity accessible only to a privileged few. Beyond dinner-time conversations about the rising (or plunging, as the case may be) Nifty and hush-hush tips about companies that may rule the markets of India’s ballooning middle-class, investments, and investing ideas were often approached with an air of mystique. But that was then; 2020-2021 has ushered in a new era of financial literacy and everyone is interested! The pandemic changed the rules of the game and made everyone sit up and take notice of their savings and the need to invest. This is fortified by the record number of Demat accounts opened, even at the peak of the pandemic, when the economy was distressed, and the stock markets diverged and rebounded. Indian investors opened a record 14.2 million new Demat accounts in FY21, nearly three times that of the previous fiscal year, and the Nifty shot up from around 8500 at the end of FY20 to above 14600 by the end of FY21.

2. Whether it’s direct stocks or commodities, mutual funds or cryptocurrency, everyone is now putting a lot of time and effort into figuring out how to save and build wealth for the future. As the investment landscape heats up and finances as a subject become more accessible to the masses (at last), new and innovative ideas have cropped up and disrupted the industry. Case in Point: Smallcase The term ‘Smallcase’ is synonymous with the company of the same name, founded in 2015 by Anugrah Shrivastava, Vasant Kamath, and Rohan Gupta to bring theme-based investments to non-institutional investors. To put it simply, Smallcases are modeled around legacy portfolio management strategies that had so far been reserved for large investors (read HNIs & HNWIs). A smallcase fund or simply ‘Smallcase’ refers to a collection of a group of stocks based on a certain sector, technology or theme that is managed by SEBI-Approved Fund Managers. This is, in a way, a tangible method to invest money into multiple companies’ shares when trying out strategies the fund managers believe could work well together at some point down the road; it introduces an element of diversification instead of cherry-picking ‘industry stalwarts’ among laggards. Let’s see this with an example: Suppose you feel very positive about high-growth tech stocks in the long term. You want to invest in them, but are unable to hand-pick the best bets – or you simply don’t have the knowledge or the time to research. In this case, buying a specific Smallcase that invests in the theme will be ideal, instead of buying a random stock from the sector based on a large-cap or small-cap categorization. Smallcases typically help investors walk the middle path between mutual funds and direct investments in stocks. What are Smallcases? Smallcases infuse a Portfolio-Driven Approach To Investing; individual stock units will be credited to your Demat account once you make a purchase. This is not the case with respect to a mutual fund, where you gain access to the aggregated fund alone and not the underlying companies. What this also means is that when you Invest In A Smallcase, you become a part-owner in every stock that is in the portfolio of your chosen Smallcase, and you are eligible for dividends and other rights assured to shareholders.

3. The cost of investing in Smallcases may be comparable to investing in mutual funds, and different Smallcases have different expense ratios as per the RIA (Registered Investment Advisor) Handling The Portfolio. However, no exit load was applied on Smallcase redemptions. Every charge applicable to stock trading is applicable to Smallcases too. Read more about how does smallcase work