Introducing Investment Score on smallcase!

As financial awareness continues to grow, we understand that the wealth of information available on investing can be daunting. At smallcase, our mission is to demystify the complexities surrounding investing by offering user-friendly tools that streamline every investor’s path towards creating a resilient and well-diversified portfolio. That’s why we’re introducing Investment Score on smallcase – to empower investors with clear and actionable insights, to make it easier for them to achieve their financial goals.

What is the Investment Score?

The Investment Score reflects the current state of your investments in Mutual Funds, Stocks/ETFs, and smallcases as objectively as possible. It’s a comprehensive metric that offers valuable insights and actionables to enhance the overall health of your portfolio.

• The score is calculated based on two major factors: diversification among different assets and investing discipline
• The score is calculated out of a total of 900. The higher the score the better it is 
• Once you calculate your score, you’ll get actionable next steps to improve your score and enhance your overall portfolio health

How is the score calculated?

The Investment Score calculation is based on a well-researched investment approach, known as the core-satellite approach, which involves dividing the portfolio into core-stable assets, slow-moving satellites – steady assets and fast-moving satellites – high-growth asset classes.

For instance, ​the stable portion can consist of low-risk assets like short-term debt funds, asset allocation-based smallcases etc. which provide stable returns. Steady assets can include medium volatile assets like largecap-focused mutual funds and smallcases which can provide higher returns than core assets but are also more volatile than core assets. High-growth assets can consist of mid & small-cap focused mutual funds and smallcases, which have the potential to provide higher returns but are more volatile and risky than steady assets. 

Keeping this strategy in mind, your Stocks/ETFs, Mutual Funds and smallcases are divided into 3 categories based on their volatility: Stable Assets, Steady Assets and High Growth Assets. 

Now, let’s delve into the specifics of how the Investment Score is calculated. 

• For checking your portfolio diversification, deviation from the ideal ranges of stable, steady and high-growth assets are calculated. The lower the deviation from the ideal ranges, the higher the score and vice versa.
• Your investing discipline is checked and identified using SIPs and rebalance updates
  • If you haven’t set up SIPs for your non-core Mutual Funds and smallcases or have been missing your SIP instalments, your score may incur a penalty.
  • Another factor for recognising your investing discipline is determining if you have followed the original investment strategy. Thus, if you have not applied the rebalance update issued by the creator of your smallcase for a considerable time, your score might take a dip.

Who calculates and maintains the Investment Score?

• Windmill Capital – a wholly owned subsidiary of smallcase and a SEBI registered research analyst calculates and maintains your investment score.
• You can also access a detailed report on your investment score, issued by Windmill Capital on the smallcase app. The report breaks down your investment score into individual components and provides the necessary insights and disclosures.

Understanding your score

A high score indicates that your Mutual Funds, Stocks/ETFs and smallcases are close to the ideal proportion of stable, steady, and high-growth assets. If you’ve initiated SIPs and consistently executed them, along with regularly checking rebalance updates on your smallcases (if applicable), you’re likely to have a higher score.

On the other hand, a low score may suggest a need for adjustments. It could mean insufficient exposure to stable and steady assets, a lack of SIPs in your Mutual Funds/smallcases, or not reviewing rebalance updates for more than 1 month on your smallcases (if applicable).

Also Read: How to Improve the Investment Score?

Benefits of the Investment Score

• Adherence to Researched-Backed Strategy: The Investment Score is based on a renowned investment approach which emphasizes a balanced mix of stable and growth-oriented assets. Adhering to this approach helps investors strike a balance between risk and return, reducing the likelihood of extreme fluctuations in portfolio returns.
• Clear Insights and Actionable Steps: The Investment Score goes beyond mere evaluation; it offers actionables to enhance overall portfolio health. Investors receive specific steps they can take to improve their score, optimise their asset diversification, and improve their discipline.
• Continuous Portfolio Health Check: Regularly assessing the Investment Score provides users with timely insights into their portfolio’s health. This continuous monitoring allows investors to make adjustments, ensuring that the portfolio remains resilient to changing market conditions and potential risks.

How can you check your Investment Score on smallcase app?

• Visit the ‘Investments’ tab on the smallcase app 
• Tap on the ‘Unlock Investment Score’ button at the top of the page
• Import your external holdings in Mutual Funds and Stocks/ETFs. If you have already imported your holdings, you’ll automatically see your score after unlocking it.
• Once you view your score, you can also take a look at the actions that can help you improve your score 

Whether you’re a seasoned investor or just starting your investment journey, the Investment Score is designed to help you make informed decisions and improve your portfolio’s diversification and resilience.

So, get ready to succeed on your investment journey with your new guide – the Investment Score!

Please note: With the introduction of Investment Score, the previously existing tool, Portfolio Health is now being deprecated on smallcase. Users can checkout their Investment Score on smallcase app v6.20.0 and higher.

Investment Score has been created and managed by Windmill Capital Private Limited (WCPL), a SEBI- registered Research Analyst having registration number – INH200007645. WCPL is also a wholly owned subsidiary of Smallcase Technologies Pvt Ltd.

This is a rule-based tool applicable uniformly to all the users of the tool and does not take into account any individual risk-reward preferences, demography, financial goals or any other financial assets/liabilities that an individual may have. This should not be construed as investment advice. You should seek professional advice when necessary, as the Company and WCPL do not assume responsibility for any outcomes. For detailed logic of the tool and disclosures related to WCPL, please refer to the investment score report available on the smallcase app