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How to Start Investing with smallcases – A Comprehensive Guide (2024)

How to Start Investing with smallcases – A Comprehensive Guide (2024)
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smallcase offers an innovative approach to investing in the stock market, providing retail investors with a convenient, hassle-free investment solution. It is a one-stop shop for investors who want to invest in a specific theme, strategy, or objective with ease.

This article explains smallcases and how to start investing with them.

What is a smallcase?

smallcases are modern investment products that help investors build a low-cost, long-term & diversified portfolio with ease. A smallcase is a basket or portfolio of stocks/ETFs representing an idea – an objective, theme, or strategy.

Please note that the aforementioned smallcases are for informational purposes only and are not recommendatory.

smallcase portfolios are built using a rule-based approach, meaning each portfolio’s stock/ETF list is chosen based on specific criteria and underlying strategy. These criteria could include a company’s financial health, growth potential, or position in a particular sector.

Who Creates these smallcases?

The smallcases are created and managed by SEBI-registered investment professionals (also known as smallcase managers) with years of exposure to the stock market. The constituents in every smallcase pass stringent proprietary filters that reflect the underlying strategy. 

The smallcase managers offer periodic rebalance updates to their smallcases to ensure that the underlying stocks/ETFs and their weights of a smallcase remain true to the smallcase’s theme or strategy.

What are the Pros of Investing in smallcases?

Let’s see some of the reasons why investors prefer smallcase as an investment option instead of direct stock investing:

Portfolio-based investing & diversification

smallcases help investors invest in stock/ETF portfolios curated to represent a theme, strategy or objective

Since smallcases are created and managed by SEBI-registered investment professionals, you receive timely updates of stocks/ETFs (also known as rebalance updates), such that your portfolio remains true to its underlying investment objective.

smallcases also enable you to diversify your portfolio across different asset classes, market segments and capitalisations.

For instance, the Equity & Gold smallcase, created and managed by Windmill Capital (a SEBI-registered smallcase manager), offers a low-cost investment option to build a diversified portfolio consisting of equity and gold ETFs. Given the inverse correlation between equity and gold, this smallcase is designed to ride the equity markets while hedging with gold.

Investing in readymade themes & strategies

smallcases enable you to invest in various themes and strategies instead of investing in single stocks. Single-stock investments don’t allow you to get exposure to a whole theme or strategy as much as it gets you exposure just to the prospects of a single company.

Moreover, since smallcases are created and managed by SEBI-registered investment professionals, you can access timely rebalance updates, ensuring that the smallcase remains true to its underlying theme or strategy.

Fun fact: smallcase offers 500+ readymade stock portfolios created by over 180+ SEBI-registered investment professionals.

Research and analysis by SEBI-registered financial experts

While it’s fairly easy to start investing in the stock market, properly investing in a sector, theme, or strategy requires in-depth knowledge, extensive research and expertise about the markets.

This is where smallcase managers come in. All smallcases offered on the platform (including the smallcase app) are created by SEBI-registered investment professionals

This ensures that smallcases adhere to the regulatory guidelines, and the end-user benefits from the expertise of the licensed investment professionals.

Rebalancing and portfolio tracking

Investing directly in stocks makes it difficult to track the performance of your investments at a portfolio level. For instance, if you have ~30 stocks spread across 3-4 different investment objectives, manually tracking them can be difficult. Moreover, you will require significant time and effort to track and periodically rebalance your investments to ensure that your portfolio stays aligned with your investment objective.

Investing via smallcases implies that you will:

  1. Receive periodic rebalance updates for your portfolio from the smallcase manager and
  2. Efficiently track your portfolio’s performance

How to Invest in smallcases?

Here’s a simple 3-step process:

1) Login and connect your broker account

  • Head over to smallcase website or download the app
  • Log in with your phone number
  • Connect your broker account. You can also choose to skip this step and do it at the time of investment

2) Select your smallcase

Next, you need to select your smallcase. You can choose from various objectives, themes, collections, strategies, etc. To make the journey easier for you, we have worked on several ways in which you can zero in on a suitable smallcase for you. Let’s look at some of them –

  • Find your smallcase: This feature allows investors to begin their investment journey with smallcase and is based on the popular core-satellite approach. This approach helps investors build a diversified long-term smallcase portfolio for efficient wealth creation.
  • Collections: We have grouped certain smallcase portfolios into various collections/categories to help you discover what suits you best. Some collections include Budget 2024 Picks, Dividend Growth and Tackle Market Volatility.
  • Filters: Head over to the Discover page on the app or our website, and use the various filters to discover smallcases that might be of interest to you. You can filter smallcases according to the minimum investment amount, volatility, investment strategies, top gainers, etc.
  • Managers: smallcase portfolios are built and managed by SEBI-registered investment professionals with strong investing experience in the capital markets.

In case you pick a fee-based smallcase, you’ll need to subscribe to the smallcase before you can invest in them

3) Invest 

  • Once you have chosen your smallcase (and gotten their subscriptions if required), all that remains is clicking on the Invest Now button. 
  • Once done, the constituents of the smallcase get credited directly into your demat account – making you the legal owner of the securities. 
  • You can also view the smallcases you have invested in, along with their performance and other details, on the Investments page.

With smallcases, you can also start an SIP – just add the date, amount, and frequency as per your requirements, and you’re set. 

Also, it’s worth noting that smallcase portfolios are regularly rebalanced, which helps in keeping the smallcase aligned with its underlying idea. Rebalance frequency is specified by the respective smallcase manager, and such alerts are sent to you as and when the changes become live.

Why Should I Invest in smallcases?

Here are some very obvious pros of investing with smallcases:

Investing in ideas is easier and more intuitive

Investing in single stocks requires in-depth research and knowledge about financial markets and business analysis. Experts spend years learning about it before applying it. And, let’s be honest – not all of us have the time for it. 

However, with smallcases, you don’t invest in single stocks – you actually invest in a managed portfolio that’s based on an underlying theme, strategy or objective. You can also gain confidence from the fact that all smallcases are managed by SEBI-registered investment professionals.

For example, it is much easier to understand and invest in the growth of rural India, via the Rising Rural Demand smallcase rather than investing in a single stock that might benefit from rural India’s growth. (Note: This is an example and not a recommendation).

Complete transparency and control

At smallcase, we believe that transparency is the currency of trust – even more so in the wealth management space. We strive to make smallcases and your investments in them as transparent as possible. You have complete knowledge about where your money has been invested in, and are given complete control over these investments. The stocks and ETFs bought through smallcase would be credited to your broker demat account, thereby giving you full control over your investments. There are no lock-in periods or expense ratios when you make an investment in smallcases. You are free to sell your holdings at any time, and can even customize your smallcase investments or tweak them according to your needs.

smallcase portfolios are well-researched and curated by investment professionals

smallcase portfolios are built by SEBI-registered financial professionals with years of experience in the stock markets.

We understand that an average retail investor who wants to build wealth over the long term might not necessarily have the know-how and time to research and invest in stocks.  Plus, it’s even more difficult to tie such knowledge to broader themes, objectives and strategies. 

That is why smallcase makes investing much easier, as these stock portfolios are built and managed by SEBI-registered professionals. At the same time, the broader theme or objective of the smallcase is kept simple for you to understand.

Wrapping it up

With smallcase, investors can easily access and invest in a portfolio that aligns with their investment goals and preferences.  This platform offers a seamless and hassle-free way to invest in the stock market, with minimum paperwork and low fees. 

Whether you’re a seasoned investor or a beginner, smallcase offers 500+ readymade stock baskters for every need, and can help you create a well-diversified and customized investment portfolio.