A. Portfolio Health
- Portfolio Health is a tool based on the core-satellite approach that analyses the stocks in smallcases & helps in mitigating risks. This tool is available on your Investments Page after you login into your account. If you are using the smallcase platform on the broker website or app, whether the Portfolio Health tool is available on the investments page depends on your broker approving the same.
- The logic for this tool is provided 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.
- Core-satellite approach – Core and satellite is a common and time-tested investment approach that consists of a core investment and other satellite investments that complement it. The objective of this approach is to build a solid investment foundation using asset allocation to protect your wealth in volatile times and enhance returns with risky satellite investments in long term.
- Core Investment – Currently, the all-weather-investing smallcase created and maintained by WCPL is taken as the Core Investment for the purposes of this tool. The AWI smallcase consists of low-cost Exchange Traded Funds (ETFs) where the underlying securities comprise of Equities, Gold and Fixed Income respectively. This smallcase is designed to provide stable long-term returns and ensures that the core of your portfolio is strong, protected and growing. Read more about it here – AWI smallcase. In future, when more of such smallcases created by other managers, with sufficient history and good live performance is available on the platform we would include them also as an option for the core investment.
- Satellite Investments – Satellites are the investments apart from the core. Satellites are the smallcases that are riskier than the core AWI smallcase, but also have the potential of offering greater returns. The satellite smallcases are of 2 types:
- Slow moving satellite smallcases – These smallcases consist of stocks of large-cap companies, which are the top 150 market cap stocks listed on NSE. They are riskier than the core All Weather Investing smallcase and move up or down with the benchmark equity indices like Nifty.
- Fast moving satellites smallcases – These smallcases majorly consist of mid-cap and small-cap stocks. These smallcases can generate high returns, but are very volatile in nature. Thus, you should look into investing in them only after you have built your core and have also invested in the slow-moving satellites for reducing volatility in your investment portfolio.
- Portfolio Health Card – The Portfolio Heath tool analyses the stocks in your smallcase(s) portfolio based on the core satellite approach. The Portfolio Health tool analyses the stocks in the portfolio to determine the core investments, large cap stocks, mid and small cap stocks. The Portfolio Health Card and relevant action (if any) bases on the analysis are populated as per the logic set out below:
S. No Portfolio Health Card Rationale Suggestion 1 Portfolio is empty There are no investments in smallcases To start investment journey with core portfolio 2 Portfolio has good mix Investments in CORE smallcase and Slow-Moving Satellite smallcases comprise 30% each of overall smallcase investment portfolio --- 3 Core Missing No investment in CORE smallcase To invest in the core portfolio for better protection in downturns and improved diversification 4 Core lagging Investment in CORE smallcases is less than 30% of overall smallcase investment portfolio To invest in the core portfolio for better protection in downturns and improved diversification 5 Large Cap Missing No investment in Slow Moving Satellite smallcases To invest in the largecap smallcases available on the website/app where you are accessing the smallcases platform. This is to ensure better risk adjusted returns in the long term and improved diversification 6 Large Cap lagging Investment in Slow Moving Satellite smallcases is less than 30% of overall smallcase investment portfolio To invest in the largecap smallcases already held by the user. This is to ensure better risk adjusted returns in the long term and improved diversification
B. Find my smallcase
- The Discover Page of the smallcase platform helps users to discover investment ideas. On this page, the Find your smallcase tool is present along with collections of smallcases categorised basis their strategy, objectives and or fundamentals.
- In the All smallcases section, smallcases are present in a list format where the users can apply various filters such as minimum investment amount, volatility level and type of smallcases (based on constituents, strategy / objectives).
- Find your smallcase is a tool to assist users to find an appropriate smallcase. It works on the core-satellite approach. This tool also works in conjunction with the Portfolio Health Tool to indicate smallcases to the investor based on the Portfolio Health Card and relevant action (if any).
- Find your smallcase will first help an investor build a core foundation for their portfolio by indicating the core smallcase(s). To understand what are core smallcases, please read point 4 in the portfolio health disclosure.
- After building the core, "Find your smallcase" helps the investor to add other appropriate investments (satellite smallcases) to their portfolio that are required to achieve the right balance of risk & returns. The user can directly come to this step by skipping the 4th step, if he/she wants to explore riskier/more volatile smallcases than the core smallcase. Further the tool, lets the user explore more risky/volatile smallcases in different categories, as selected by the user
- The logic for this tool is provided by Windmill Capital Private Limited (WCPL), a SEBI registered Research Analyst having registration number - INH200007645.
C. Similar Stocks on Create Page
Similar stocks are shown to a user when he/she decides to create a smallcase and starts adding stocks to it. The platform follows the following algorithm to show similar stocks to add to the portfolio:
- User adds stocks to the smallcase by directly typing company name in the search box.
- Platform identifies the sectors of the stocks added by the user in the smallcase.
- It then shows 4 stocks in a decreasing order of Market Capitalization for various sectors present in the user’s smallcase.
If a user adds HDFC Bank Ltd. in the smallcase, the platform picks the sector as “Private banks” and shows 4 stocks from the Private Banks sector in the decreasing order of market capitalization, under the similar stocks section.
- The objective of the Portfolio Health tool and the Find your smallcase tool is to identify and evaluate the risks in your smallcases portfolio due to inadequate diversification.
- Suggestions for investing in additional smallcases (if any), are only for the purposes of ensuring proper diversification, on a best effort basis. These suggestions are derived from a fixed model without any reference to the investor’s risk profile, financial needs and goals.
- All the tools or activities mentioned in the above points A, B & C should not be construed as investment advice or as a solicitation to invest in the smallcases and the investor is advised to consult his / her advisor prior to arriving at any investment decision.
- There is no assurance or guarantee that the investment objectives of the respective smallcase(s) will be attained.