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Does Many Smallcases = More Profit?


That said, over-diversification is overkill. Every asset class and related asset-allocation format (in this case, smallcase) has its own benefits and limitations, especially if you have too many. In this blog, we’ll take a balanced look at both – the pros and cons of investing in multiple smallcases


Can you get wealthy by investing in multiple smallcases?


For years, portfolio management services have eluded the retail investor. Be it the daunting ticket size (50L since SEBI revised it in 2019) or the complexity of the systems at large, investors looking for a credible asset manager had to make do with mutual funds. The truth is, tailor-made asset management services were always reserved for those with an existing high net worth; as a result, stock-market investing has traditionally been a thing of mystique for the average investor. But smallcases as a concept disrupted this market, and how


Smallcases provides retail investors with high-quality capital management services traditionally associated with a typical PMS. You may possibly call smallcases ‘affordable PMS’! With investment portfolios that are tailor-made to multiple investors’ investing goals and bundled risk appetite, smallcases are a viable idea worth exploring for most investors. Additionally, a ticket size as low as Rs 5000 is small enough for most people looking to invest in equities and this consideration truly breaks the entry barrier for a new investor.



That said, over-diversification is overkill. Every asset class and related asset-allocation format (in this case, smallcase) has its own benefits and limitations, especially if you have too many. In this blog, we’ll take a balanced look at both – the pros and cons of investing in multiple smallcases.


Why Investing In Multiple Smallcases Is A Good Thing:


1. Counter volatility:
One of the main reasons to have multiple Smallcases is they allow an investor to maintain a portfolio that may tide over volatility smoothly. Smallcases essentially are bundled thematic investments. Should one theme be affected by market movements, there is a possibility that your other smallcase investments buoy your overall portfolio, helping you cross over the short-term fluctuations in the market.


2. Fulfilling different goals:
Diversifying across multiple smallcases may allow us to meet diverse life goals. You can explore investing in smallcases across bundles that commit to delivering capital appreciation or beating inflation and/or stable income and wealth protection. By dividing your corpus into different smallcases, you can undertake and achieve different financial objectives. These risk spectrums allow us to better manage our investments for multiple goals, and monitor them according to the benchmarked goal.


3. Ease of implementation:
A key advantage of smallcase is their ease of implementation. You don’t necessarily need a broker or sell-side entity to make individual trades of the stocks in your smallcase portfolio – you can do it directly through smallcase too. Buying and selling smallcases is exactly like buying stock, done at the click of a button and the shares are directly credited to your demat. Moreover, smallcases like that of Deeva Ventures are regularly and personally monitored by highly qualified investment advisors who make sure your investments are secure and portfolio is rebalanced on a regular basis.


Now that we’ve seen the bright side, it’s also important to be wary of the pitfalls. We’ve made a list of some cracks in the wall that you should consider before accumulating too many smallcases.


Why Investing In Multiple Smallcases May Not Be A Good Thing:


1. Portfolio Overlap:
Too much of anything is not a good thing. This stands true for diversification of your portfolio through smallcases too. It is very likely that certain well-performing stocks may be repeated across multiple themes and hence a part of multiple smallcases. This could lead to concentration risk should your exposure to particular stocks become high cumulatively across smallcases. Also, with your portfolio filled with Smallcases that have diverse asset allocation patterns, it may result in you not getting the best possible performance out of your money. Your returns get averaged out.



2. Expensive cost of access:
Many investors are confused by the fact that you have to pay a minimum amount to subscribe to quality smallcases. The fee involved with any Smallcase is not much; it’s just about 2% and this may really not be an issue when you consider the advantages it may give you – professional fund management service at a fraction of the cost. However, overspending in this regard might make it more difficult for you to make an absolute profit, excess of costs.



3. Hard to monitor:
If you invest in multiple smallcases, for example, 10 smallcases and above, with every Smallcase comprising of at least 10 companies, you will essentially end up with a portfolio that has over 100 stocks. In this scenario, it will be very difficult to monitor performance and manage risk over time! You might never quite understand what’s doing well, what’s underperforming, given that the stock market is a dynamic beast that changes with every trading session. As an investor, you need to know the exact details about what’s going on with your portfolio, which is why investing only in a few selected Smallcases is better for most investors.



The Bottomline
Smallcases are an interesting investment product- a form of research-led asset allocation program that can give you better returns with managed risks. But it’s important to make the right decisions in the beginning if you want it to work for you in the long run. There are a few advantages and a few disadvantages of investing in multiple smallcases, but they’re still a very good option for investors who don’t have the patience or the time to analyze their portfolios closely. So while investing in multiple smallcases is not really a bad decision, it should be done with caution and a fair bit of understanding of the product to arrive at a number that works for you. We’ll leave you with what Oscar Wilde wrote – Everything in moderation, including moderation!


Source: Tejimandi

Smallcase vs Mutual Fund : Which one is better


Mutual funds and Smallcases are the two asset structures in contention, and we’ll compare them over the course of this article to understand the fundamental difference between Smallcase and mutual funds.


As investors, most of us spend a considerable amount of time window-shopping for the right investment avenues. “Should I invest in the safety of debt instruments or should I stay equity-focused? Should I pick evergreen stocks or can I benefit more from trading the seasonal ones? What about adding some cryptocurrencies to my portfolio? How long should I stay invested?” Questions, so many questions.


The truth is that unless you’re an exceptionally nuanced investor with well-rounded insights about multiple sectors, a diversified portfolio can hold the answer to most ‘what and why questions as far as investments are concerned. Two financial avenues facilitate this diversification optimally; the first is a household name and the second has emerged as a buzzword in the last year or two. Mutual funds and Smallcases are the two asset structures in contention, and we’ll compare them over the course of this article to understand the fundamental difference between Smallcase and mutual funds.


What are mutual funds?


A mutual fund is a pool of money collected from many investors to invest in securities like stocks, bonds and other assets. Professional fund managers, vetted and hired by mutual fund houses or Asset Management Companies (AMCs) are responsible for picking the constituents of the fund and allocating capital; they can attempt capital gains or income production based on the investment objectives of the fund as per the prospectus set out at the time of the fund launch (called NFO).


What is a Smallcase?


A Smallcase, on the other hand, represents a capital allocation structure similar to portfolio management services (PMS) that were previously reserved for wealthy individuals (Read: HNIs and UHNIs). As a product, this is an idea that has caught the fancy of many well-heeled millennials as well as on-the-brink wealthy, ever since SEBI hiked the minimum investment amount for portfolio management services (PMS) from ₹25 lakh to ₹50 lakh in November 2019. In some sense, Smallcase may be called affordable PMS – with a starting price as low as Rs199/month. Basically, a Smallcase is a basket of stocks or ETFs, decisively created by the top qualified and registered investment advisors (RIAs) in India, based upon a theme, strategy, or objective.


David vs Goliath: A legacy product vs a promising challenger


If we have to compare the sheer size of the market with respect to Assets Under Management (AUM), mutual funds represent ₹36.74 trillion as of September 30, 2021. In comparison, Smallcases are a disruptive product that has been around for approximately 6 years now. Quoting the founder and CEO Vasanth Kamath “Our users multiplied three times from 9 lakh in March 2020 to 28 lakh in March 2021.” In FY21, the firm saw Rs 8,000 crore invested through its platform. A drop in the ocean, as far as the larger financial products industry is concerned.



Smallcase vs Mutual Funds: Points of Comparison


1. Exercise Control
Investing in Smallcases potentially offers investors better control over securities as the shares are credited directly in the Demat account. Having the portfolio right at your fingertips allows you to time your exit and know where each investment goes, which isn’t possible with mutual funds; you can cherry-pick which mutual fund you want to invest in, but the customization ends there.



2. Risk Mitigation Mechanisms
Smallcases are thematic investments; they invest in companies and securities that follow an underlying strategy or idea. For example, there can be a Smallcase that focuses on Clean Energy companies or fast-growing tech companies that focus on enterprise software integrations. Since these ideas are highly specific, diversification is restricted. For those intent on diversification, mutual funds offer a basket of good companies that are related by larger themes such as industry type and revenue benchmarks that may be a better hedge against volatility over several business cycles.



3. Cost of Leaving
In many mutual funds, there is an in-built penalty for liquidating your assets before the minimum stipulated time (generally just about a year)- this expense is called the exit load which ranges from 1-2% of the total investment. Typically, all mutual fund houses adjust this amount against the net asset value (NAV) of the fund. Smallcases, by design, allow investors to buy individual units of securities that are directly credited in the demat account like common shares. Since there is no exit load on selling shares, there is no exit load on selling smallcases.



4. Management Fee
Any asset allocation structure is only as good as the people managing it, i.e., the fund manager- who in these cases is typically someone who holds high repute in the financial markets. Understandably, this expertise attracts a certain cost, apart from the cost of monitoring and managing the fund. In the case of mutual funds, this cost, called the expense ratio, is a percentage of the total fund value, capped at 2.5% by SEBI. Smallcases have no fixed range – the cost differs from case to case and RIA to RIA, depending on the nature and theme of the basket of investments.



5. Access to Returns
Smallcases give investors direct access to their holdings since the shares are directly credited to their demat account. Hence, all corporate actions such as dividend distribution as well as the issue of bonus shares take place directly with the investors. In the case of mutual funds, the returns are collected in real-time but distributed quarterly.



6. Volatility
Due to the nature of the theme-wide concentration of Smallcases, they are typically more volatile than the stock market in general since the risk is concentrated in a specific strategy or idea. However, as one of the fundamental principles of finance states – the higher the risk, the higher is your potential for gains. Mutual funds, on the other hand, spread the risk across companies working in different areas even if the fund is concentrated in a specific industry. Hence, the latter is more resilient during market ups and downs.


Where should you invest?
While choosing between mutual funds and Smallcases, you must consider the following questions:


• Do you have adequate knowledge of the market?
Investing in a Smallcase requires some degree of market research and ample time to sort through to find the best Smallcase to invest in. It is an excellent investment for those who have a good idea of how markets operate. However, you can invest in a mutual fund without any market knowledge.



• How much control do you want over your investment?
Smallcases allow you greater flexibility, transparency, and control over your portfolio. You can choose a Smallcase that aligns closely to your financial goals and ideas, giving you greater discretion. On the other hand, investing in mutual funds comes with comparatively low transparency, and you have minimal influence over your portfolio.



• For how long do you want to park your funds?
Smallcases come with no lock-in periods, while mutual funds require you to lock-in your money for a considerable amount of time. Moreover, the charges associated with mutual funds are higher.



• How much time are you willing to spend on tracking your investment?
Investing in Smallcases requires you to keep a tab on your investment. You will have to decide when to enter the market and when to exit it to get the most returns. You may also have to keep a check on the returns to make sure they are on track. As for mutual funds, you can simply invest and let the experts take care of your investment. You may review it once a year.



Based on how you answer these questions, you may choose between these two investment avenues.


Closing Thoughts
As far as investments as concerned, asset allocation structures are as effective as the investor’s understanding of their goals. Both Smallcase and mutual funds are excellent avenues for growing wealth and intelligent investors should use these tools judiciously to their benefit. Where mutual funds provide the diversification a portfolio might need, Smallcases are conveniently packaged customizable investments in simple ideas that could return well over time.


Source: Tejimandi

How do SIP’s work in a Smallcase?

Risk appetite and risk tolerance are one of the most important criteria in selecting investments. Let’s look at how to match them in Smallcases.


How do SIPs work in a Smallcase?


Well, the answer would depend on who you ask. If you ask an expert stock investor who understands the technicalities of the stock market, can do extensive research, and then pick the right stocks, the answer would be the former. However, ask other investors who don’t have such hands-on knowledge of the stock market and the latter would be the most preferred choice.


Most investors fall in the second category, and so, for them, Smallcases prove to be ideal investment avenues. A Smallcase is a readymade portfolio of stocks and ETFs that follows a specific theme or investment idea. Most are handcrafted carefully by astute fund managers and Sebi-registered investment advisors. For example, the Deeva Ventures Flagship is a Smallcase that consists of 15-20 handpicked stocks from the Nifty 500 index. Similarly, Deeva Ventures’s Multiplier Smallcase consists of small and mid-cap stocks that have the potential to deliver exponential returns.


Smallcases, thus, help you invest in a well-researched portfolio of stocks to earn better risk-adjusted returns. They are also constantly monitored by experienced analysts so that the portfolio can be recalibrated with changing market dynamics. This ensures that your investment stays relevant in all market conditions.


Investing in Smallcase

When it comes to investing in a Smallcase, there may be a minimum investment amount that depends on the Smallcase that you pick. This further changes with the market as the cost of one share of each stock or ETF that comprise the Smallcase changes. For instance, Deeva Ventures’s Multiplier Smallcase required a minimum investment of Rs.46,987, while the Flagship Smallcase required Rs.24,676 when we compiled this article. Check out their prices now.


There is no maximum limit to investment or the number of smallcases you may hold. You can invest in a Smallcase in a lump sum or in regular installments through SIPs (Systematic Investment Plans).


However, entry into SIP-based investments in Smallcases is slightly differently structured from SIP investment in mutual funds. Both, nonetheless, allow you to invest affordably and create a disciplined investing habit that may serve you well in the long term.


How SIP investing works in Smallcase?


Before we get into how SIPs function in Smallcases, note that Smallcases are a basket of stocks and ETFs with dynamic price movements. And unlike mutual funds that permit one to buy partial shares, investors need to purchase full units of the stocks. That is, if a Smallcase portfolio has stocks of 10 companies with 10 units of shares each (equal-weighted), the investor will need to purchase all the 10 stocks at the price of the day, even though he need not purchase them in the same weightage (no compulsion to buy 100 shares). The minimum investment amount is thus dynamic in nature and updated in real-time, in line with the daily price movement of the underlying assets.


So, the first investment in a Smallcase needs to compulsorily be a lump sum investment that adheres to the minimum investment requirement for most Smallcases. You may thereafter activate a SIP in it for no additional charges. This means that a SIP in Smallcase is possible only in Smallcases that you have purchased and subscribed to.


The first investment amount, called the Minimum First Investment Amount, is the least amount required to invest in all the stocks of the selected smallcase as per the weights.


Once added to your portfolio, you can then proceed to establish a SIP in it. Note here that your SIP amount will be different from your Minimum First Investment Amount.


According to Smallcase, you can start a SIP for an amount less than the minimum investment amount for the smallcase, if the minimum investment amount is more than Rs 10,000.


Of course, the SIP amount is less than or equal to the minimum investment amount in Smallcases where the minimum investment amount is less than Rs 10,000.


The SIP frequency, on the other hand, depends on the Smallcase that you choose. Almost all Smallcases allow monthly SIPs, while some schemes, like Deeva Ventures’s Smallcases also allow weekly, quarterly and annual SIPs for easy investments.


Another point of difference with mutual fund SIPs is that when you set up a SIP in Smallcases, you essentially set up only an investment reminder. Your investment is not really automated. You simply get a reminder to invest in the SIP instalment. That said, Smallcase facilitates a 2-click process to invest in further SIPs.


Why are SIPs beneficial?


SIPs are a beneficial way of investing in Smallcases. Here are the reasons why –


• They are affordable

The primary reason that makes SIPs favourable is their affordability. With SIPs you can invest in the desired Smallcase without feeling a pocket pinch or disturbing your budget. It allows you to invest in small and affordable amounts, regularly, and still create a sizable portfolio of stocks.


• You don’t have to wait for the right time to invest

Investing in the stock market is all about picking the right time to enter so that you can buy low and sell high. Picking the right time is, in effect, a challenging task. You need to monitor the markets closely and speculate on the time when the prices fall so that you can enter.


• Do you have the time and know-how for the same?


With SIPs, you don’t have to time the market. You can invest at predefined intervals without hassling over the right time.


• If you invest with a long-term horizon, compounding grows your corpus

Long-term horizons can do wonders for your investment. You can cash in on the benefit of compounding, which helps multiply the returns that you can earn. With SIPs, as you invest affordably if you give your investment time, you can accumulate a considerable corpus for your financial goals through the power of compounding.


• Get the benefit of rupee-cost averaging

SIPs give you the benefit of rupee cost averaging. In rupee cost averaging, the effective value of periodic investments is neutralised, positively impacting your overall cost of investment. When you invest in SIPs, you invest at different times and at different rates. The aggregate rate, then, gets averaged out. In falling markets, you end up buying more, and in rallying markets, you tend to buy less. These two purchases balance each other out, and the investment becomes more cost-efficient.


• Invest in a disciplined manner

SIPs inculcate a disciplined investment approach. Imagine getting reminded at periodic intervals to invest!


With SIPs, you can regularly invest, without fail, so that your modest investments accumulate to a sizable corpus that helps you fulfill your financial goals.


SIPs, thus, are quite beneficial and help you invest in the desired Smallcase without worrying about its affordability. You can also continue to opt for multiple SIPs in multiple Smallcase portfolios so that you can diversify your investments.


Some things to keep in mind about SIPs

 Deeva Ventures

• While SIPs allow ease of investing in Smallcases, here are a few points that you should keep in mind-



• Starting a SIP in a preferred Smallcase portfolio is quite easy. You can invest online and click on the option of SIP when investing.


• You only get an investment reminder on the SIP due date, and you have to invest manually. Some brokers, however, are automating the SIP investment wherein the amount gets debited from the registered bank account and is invested in the portfolio.


• The minimum SIP amount depends on the Smallcase that you choose. It is not uniform.


• You can stop the SIP at your discretion. There is no lock-in period


The bottom line


Understand what SIP investment is all about in the context of Smallcases. Know how it works and how you can start your very own SIP. Choose a profitable and consistently performing Smallcase and start a SIP to get the maximum benefits that SIP investments can provide. You can check out Deeva Ventures’s Smallcases that have a good portfolio and can help you create a corpus worthy of your financial goals.


Source: Tejimandi

Why Direct Stock Investors Should Invest in smallcases

If there is one thing that can be said about direct stock investors, it is that they are certainly not averse to risks. Someone who invests directly in stocks does so with the understanding that the stock markets are going to be volatile. There will be bad days along with the good days, but as long as the good ones outnumber the bad ones, the investor would consider himself or herself to be successful.


Direct stock investors embrace market volatility and take investment decisions based on these ups and downs. But there are a number of reasons why direct stock investors would also benefit by investing in smallcases.


Portfolio-based investing


Investing in a portfolio of stocks has proven to be more beneficial than investing in 1 or 2 stocks. A portfolio allows you to diversify across market segments and capitalizations. Not only do you benefit from the upside in different stocks, but a portfolio also allows you to stay protected from the downside in a particular stock.


Investing in readymade themes & strategies


Direct stock investors follow the news and purchase stocks of companies that they believe will do well. This can easily be done when investing in individual stocks, but not when an investor is following a theme or an investing strategy. After all, tracking news & updates for more than 10-15 stocks is time-consuming. A smallcase will allow you to invest in ready-made themes & investing strategies that have been created by SEBI licensed professionals. For example, if you want to invest in companies that own brands which India loves, we have the Brand Value smallcase.


Research and analysis by experts


One of the biggest hurdles for stock investors is taking the time and effort out to research stocks. Fundamental analysis of companies is an important step before buying its stocks. This, of course, is not easy to do and can take away a lot of the investor’s resources. But not if you invest in a smallcase. The hard work is done for you by the smallcase team of researchers and analysts. The stocks in every smallcase pass our stringent proprietary filters so that investors don’t have to worry about making the individual choices.


Investing in smallcases comes with many other benefits. They are transparent, customisable and straight-forward.


smallcases come in different types–thematic/sectoral, strategy-based, asset-allocation based, and those based on smart beta. Check them out and begin investing in the ideas you believe in. And if you still haven’t found a smallcase that’s right for you, remember that you can always create one yourself very easily! Add the stocks that you have in mind, see a simple-backtest before investing, and then conveniently buy/sell all stocks in 1-click – learn more about the create a smallcase feature here.

Source: SmallCase

Dos and Don’ts of investing in smallcases?

Tips to stay on track with your smallcase investments


👍 Do’s


Start SIP: SIPs are great for long-term goals. You can start a SIP while investing in a smallcase, or anytime later after investing


Track News & Dividends: Every smallcase comes with a performance summary of Index Value, Dividends, News and more


Watchlist: If you want to track and monitor the smallcase before investing, you can add it to your Watchlist


Rebalance Regularly: Rebalance updates keep your portfolio aligned with the original idea


Check Portfolio Health: Portfolio Health Helps you achieve maximum efficiency in your wealth creation journey



👎 Don’ts


Don’t skip SIP or Rebalance updates: Make sure that you always complete your SIP and apply the rebalance updates so that your financial goals remain on track


Don’t exit too soon: smallcases are built for long term investing, hence it is ideal to give your portfolios time to perform and grow your wealth


Don’t sell stocks directly on your broker platform: For all transactions relating to smallcases transact directly on smallcase platform


Don’t invest and forget: Even though smallcases are long-term investments, they should be evaluated periodically to make sure they are on track