What is a Smallcase?
A smallcase is an investment tool containing several portfolios based on different themes or strategies that investors can choose from depending on their needs. Themes can include real estate, health, technology, and more. A vital element of these portfolios is that they are made using algorithms and weights by SEBI Registered Research Analyst. In other words, investors don’t need to research individual stocks from multiple stocks and yet get a customised portfolio prepared by experts.
Some pros of investing in the Smallcase are :
- Ownership of the individual stocks in the investor’s Demat account
- The advantage of a ready-made portfolio without the hassle of researching and analysing different stocks.
- There is no restriction on selling. Smallcase, with its rebalancing feature, assists the investors in selling at the right time. Unlike mutual funds, there is no automatic reinvesting.
- There is no cost of expense ratios like in a mutual fund.
- In addition, smallcases are generally built as long-term investments. So, it helps to cover all the subscription costs and other expenses an investor might incur before investing in smallcase.
- The smallcase works on the concept of value investing. Therefore, only those stocks that add value to the portfolio will be included, and the rest will be discarded. Investing in this way will allow investors to outperform the market over time.
- Finally, investors can create a diversified portfolio at a low cost to control themselves and maintain over the long term. This helps in growing their wealth steadily.
How Does Smallcase Work?
- The first step for any investor is to open a Demat account. Through this account, all trading transactions will take place.
- Afterwards, he/she must access the broker’s platform and select a smallcase.
- Analyse the individual stocks with their respective weights, which make up that particular smallcase.
- Decide on the smallcase based on your needs and interestand buy it.
- Prices and weights of the individual stocks in the selected portfolio will determine the purchase amount. You can make a lump sum investment. Or start an SIP (Systematic Investment Plan) where you will invest a fixed amount monthly or quarterly.
- The broker platform will execute the transaction immediately once the investor clicks buy.
- After that, these smallcases are rebalanced, typically quarterly, to ensure that each stock is doing well. Investors can also rebalance their smallcases on their own.
- The investors can even sell individual stocks within that smallcase or exit the smallcase as a whole.
Which Smallcase Is Suitable for the Long Term?
Teji Mandi Flagship Smallcase
- The Smallcase offers its investors a portfolio combining 15-20 short-term and long-term stocks, all from Nifty500. With the addition of short-term stocks, investors benefit from liquidity through this smallcase.
- Its 1-year CAGR stands at 75.72%.
- In case of negative news in a sector or an unfavourable situation, the smallcase will immediately exit those stocks. This smallcase aims to build a stable and liquid portfolio which are the critical factors for a long-term investment.