As part of building a delightful investing experience for you at smallcase, we give a lot of importance to your views. Feedback is our way to understand that the product/platform is empowering you as we envisioned it would.
One such feedback was to enable you to Invest More with smaller amounts without impacting the overall weightage of the smallcase or returns. This blog explains how smallcase has approached & solved the Invest More flow for you.
Ideal weighting scheme for your invested smallcase
Before we get to the crux of the matter, we need to understand the ideal weighting scheme of a smallcase. All professionally built smallcases have a defined “Stocks & Weights” tab, where the ideal weighting scheme is outlined. It gets updated when you “Manage” or apply “Rebalance” to your invested smallcase. For created/custom smallcases, you define this while saving your draft. With time, as prices change, the constituents will deviate from the ideal weighting scheme.
What is the new Invest More order flow?
The new & improved Invest More flow on the smallcase platform allows you to add smaller amounts in your invested smallcases while trying to maintain its ideal weighting scheme as defined above.
Let us understand this with an example. Say your smallcase has five stocks and all are equi-weighted to 20% each as per the ideal weighting scheme.
Due to the fact that you can’t buy fractional shares in India, your invested weights for these 5 stocks will look something like this: 17%, 18%, 20%, 22%, 23%.
Further, due to market movement, the weightage allocated to these stocks will further deviate – say in 1 month it becomes 16%, 19%, 20%, 21%, and 24%.
Now when you place an Invest More order, our new algorithm calculates the number of shares to be bought in such a way that the weightages allocated will go back as close to 20% each, as possible. This can mean that in the previous example, you can buy Stock 1 and Stock 2 while not buying Stock 3, 4, and 5. Hence, in the new Invest More flow, you will be buying selective stocks, and not all at once.
You can put in any amount above the minimum investment amount shown on the Invest More flow, and be rest assured that the algorithm ensures that your weightage remains as close to what the manager has recommended.
In summary
1. For professional smallcases, the new Invest More order flow compares your current constituents with the ideal weighting scheme, to find the constituents that deviate the most. In case of created or customized smallcases, your ideal weighting scheme is defined while saving your draft and the Invest More algorithm will always compare with it and allocate weightage accordingly.
2. The amount is first invested in stocks where the weights may have been reduced (as purchasing fractional shares are not allowed). The new Invest More algorithm ensures your constituents try to match the ideal weighting scheme every time you place an order.
The new flow is designed with the intent of investing more by buying only those stocks which are lesser than their ideal weights. Thereby allowing you to buy only some stocks instead of all like you did when you first invested in that particular smallcase.
That’s how the new Invest More flow works. Do experience it by investing more in your smallcases under the “Investments” tab.
Like always, we will continue to innovate and offer the simplest way for you to invest. Meanwhile, if you have any questions on Invest More that weren’t already answered here, we’re on standby to help you! Drop us an email at: help@smallcase.com.
Stay home, stay safe! Happy Investing!
