A Smallcase is beneficial because it is professionally managed, invests in quality stocks, and allows you to get attractive returns. Moreover, the different Smallcase portfolios will enable you to choose a basket that matches your investment style and preference.
Stock investing has become the new buzzword among many investors buoyed by the rally in the stock market. More and more millennials are being attracted to stocks due to the profit potential that they have to offer. As per data furnished by CDSL and NSDL, the number of active Demat accounts increased by 10.4 million in 2020, making stocks a preferred investment avenue.
If you are also looking to tap into the return-generating potential of the stock market, all you need to do is open a Demat account and start investing. However, picking the right stocks, which can give you the best returns and also match your investment horizon, might prove to be a challenge. This is where a Smallcase comes into the picture.
What is a Smallcase?
Ever ordered a platter in a restaurant? One dish combines small portions of different dishes so that you can taste everything. Similar is the concept of Smallcase. A Smallcase is a curated basket of stocks or ETFs (Exchange Traded Funds) that includes different stocks or ETFs in a single portfolio. The portfolio is designed based on a particular theme or investment strategy and gives the benefit of diversification.
A Smallcase is beneficial because it is professionally managed , invests in quality stocks, and allows you to get attractive returns. Moreover, the different Smallcase portfolios will enable you to choose a basket that matches your investment style and preference.
Which Smallcase is suitable for mid-term investment?
Stock investment is usually recommended for a long-term horizon because, with time, the equity risks iron out, and you can earn attractive returns on your investment. However, if you are looking for a portfolio with a mid-term horizon, you should explore the available portfolios and choose one based on their composition.
Here are some tips when choosing the right portfolio:
- Look for large-cap stocks
If you are investing from a medium-term perspective, you need quality stocks that can withstand market volatilities. Large-cap companies are those that have established themselves in the stock market and enjoy a good reputation. Their stocks do not suffer the same degree of volatility that small-cap or mid-cap stocks do. So, when checking the different Smallcase portfolios, look for portfolios that have high exposure to large-cap stocks for less volatility and good returns.
- Ensure the portfolio has liquid stocks.
Liquidity is essential in a mid-term investment strategy. If the stocks in the portfolio are liquid, the manager can easily trade such stocks for booking profits when the market turns volatile. Liquid stocks also ensure that you can get the funds quickly since there is a ready market for selling the stocks you own on redemption.
- Diversification is key.
A diversified portfolio is essential for minimising risks and maximising gains. While a Smallcase is, by definition, a diversified basket of stocks, you should ensure that the portfolio invests in stocks across market capitalisations and also across sectors. This would help you benefit from sector-specific growth and reduce the dependency on a particular sector for returns.
- The portfolio should reflect changing market sentiments.
Choose a portfolio that changes its exposure to stocks with a change in market sentiments. Smallcase portfolios usually switch between stocks and corresponding ETFs as the markets become volatile. You should, thus, study the portfolio’s objective to see if it offers the flexibility of switching between the underlying assets to minimise possible losses that might arise due to uncertain market conditions.
The bottom line
With a diversified offering of portfolios, choosing a mid-term Smallcase is not tricky. You just need to keep the tips mentioned above in mind when analysing different portfolios and then choose one that offers the combination of all. Teji Mandi is a listed advisor on Smallcase, which offers different portfolios for investment. You can choose a portfolio for your medium-term investment, which meets all the parameters mentioned above. So, assess Teji Mandi’s portfolios and choose a suitable mid-term Smallcase to get professional investment advisory and attractive returns.