Understanding What is Smallcase and How Does it Work? | Smallcase How To Guides

by Alina Khan

Published On May 19, 2023

In this article

Welcome to the thrilling world of smallcase ! In this blog, we'll unravel the mysteries of this revolutionary investment platform and explore how it compares to other options. Brace yourself as we take you on a journey through what smallcase is, how it works, how to invest in it, and its advantages over traditional methods. Get ready to embark on an exciting adventure that will transform your investment experience!

In a world where technology has reshaped our lives, smallcase has emerged as a game-changer in the investment landscape. With smallcase, you can invest in a diversified portfolio of stocks or ETFs with just a click, eliminating the need for time-consuming stock picking. Its pre-constructed portfolios, known as smallcases, are curated around specific investment themes or strategies, making investing accessible and hassle-free.

Now, let's dive into the process of investing in smallcase. We'll guide you through the steps, from opening an account to exploring the exciting investment themes available. With just a few clicks, you can be on your way to building a portfolio aligned with your interests and objectives.

To truly understand the value of smallcase, we'll compare it with traditional investment options. And here's the icing on the cake: you can invest in smallcases on the esteemed Wright Research platform. By combining the brilliance of smallcase with Wright Research's research capabilities, you gain access to well-researched smallcases that can enhance your investment journey. It's a win-win combination that brings together innovation and expertise.

Let's dive in, see what smallcase is and unlock the secrets of smallcase together!

What is Smallcase?

Smallcase is a unique investment platform that allows investors to invest in a diversified portfolio of stocks or exchange-traded funds (ETFs) with a single click. It was founded in 2015 by Vasanth Kamath, Anugrah Shrivastava, and Rohan Gupta, with the aim of making investing simpler and more accessible to everyone.

Unlike mutual funds or traditional portfolio management services, smallcase offers a range of pre-constructed portfolios called "smallcases." These smallcases are essentially baskets of stocks or ETFs that revolve around a specific investment theme or strategy. They are carefully curated and managed by smallcase's in-house research team or partnered professionals.

How does Smallcase work?

Now that we know what smallcase is, let’s try to understand how it works. Smallcase works by providing investors with a streamlined and hassle-free investment experience. Here's how it operates:

  • Theme-based investing: Smallcases are built around specific investment themes or strategies, such as "Banking Sector Outlook" or "Digital India." Each smallcase consists of a selected group of stocks or ETFs that align with the chosen theme.

  • Research-driven approach: Smallcase has a team of researchers and professionals who conduct thorough research and analysis to identify potential investment opportunities within a given theme. They consider various factors such as market trends, company fundamentals, and industry outlooks to construct the smallcases.

  • Transparent composition: Every smallcase is completely transparent, allowing investors to see the exact stocks or ETFs included in the portfolio. This transparency empowers investors to make informed decisions based on their risk appetite and investment goals.

  • Customizability: While smallcases are pre-constructed portfolios, investors have the flexibility to customize them according to their preferences. They can add or remove individual stocks or ETFs from the smallcase, tailoring it to their specific requirements.

  • Single-click investing: Once investors have chosen a smallcase, they can invest in it with a single click. The smallcase platform automatically executes the trades and allocates the desired amount across the constituent stocks or ETFs in the smallcase.

How to invest in smallcase?

Investing in smallcase is a straightforward process. Here's a step-by-step guide to get started:

  • Open an account: Begin by creating an account on the smallcase platform. Provide the necessary details and complete the registration process.

  • Understand your investment goals: Determine your investment goals, risk tolerance, and time horizon. This will help you select the most suitable smallcase for your needs.

  • Explore smallcases: Browse through the wide range of smallcases available on the platform. Each smallcase provides detailed information about its theme, constituents, historical performance, and other relevant metrics.

  • Select a smallcase: Once you have identified a smallcase that aligns with your investment goals, click on it to access further details. Analyze the composition, historical performance, and any associated research to ensure it meets your requirements.

  • Invest in the smallcase: When you are ready to invest, specify the amount you want to allocate to the smallcase. Review the final order details and confirm the investment. The platform will execute the trades and allocate the funds accordingly.

  • Monitor and rebalance: Keep track of your investments and periodically review the performance of your portfolio. Monitoring your smallcase is crucial to ensure that it aligns with your investment goals and continues to perform as expected. Here are a few key aspects to consider when monitoring and rebalancing your smallcase:

  • Performance Evaluation: Regularly review the performance of your smallcase to assess its progress. Compare compounding returns against relevant benchmarks and evaluate whether it is meeting your expectations. Consider both short-term and long-term performance to get a comprehensive understanding.

  • Rebalancing: Over time, the composition of your smallcase may deviate from its initial allocation due to market fluctuations. Rebalancing involves realigning your portfolio by buying or selling assets to maintain the desired asset allocation. Assess whether any stocks or ETFs within the smallcase have significantly gained or lost value and rebalance your portfolio accordingly.

  • Stay Informed: Keep yourself updated with the latest news, market trends, and company-specific developments related to the stocks or ETFs in your smallcase. Stay informed about any significant changes that could impact the performance of your investments. This information can help you make informed decisions regarding potential adjustments to your smallcase.

  • Review Investment Thesis: Periodically revisit the investment thesis behind the smallcase you have chosen. Assess whether the fundamental factors and market dynamics that initially attracted you to the smallcase are still intact. If there have been substantial changes, it may be necessary to reevaluate your investment strategy.

  • Risk Management: Evaluate the risk exposure of your smallcase and ensure it aligns with your risk tolerance. If your risk appetite or investment goals have changed, consider adjusting the smallcase composition accordingly. Remember, diversification is key to managing risk effectively.

  • Seek Professional Advice: If you are uncertain about monitoring and rebalancing your smallcase, consider consulting with a financial advisor. They can provide valuable insights and guidance based on your specific financial situation and investment objectives.

Smallcase compared with other investments

When considering investment options, it's essential to evaluate how smallcase compares to other investment avenues. Here's a comparison of smallcase with traditional mutual funds and direct stock investments:

1. Smallcase vs. Mutual Funds:

  • Diversification: Both smallcase and mutual funds offer diversification benefits. However, smallcase allows investors to have more control over the composition and customization of their portfolios.

  • Transparency: Smallcase provides complete transparency regarding the stocks or ETFs included in the portfolio. In contrast, mutual funds often disclose their holdings periodically or with a time lag.

  • Cost: Smallcase generally has lower expense ratios compared to mutual funds, making it a cost-effective investment option.

  • Flexibility: Smallcase allows investors to make real-time changes to their portfolios, such as adding or removing individual stocks or ETFs. Mutual funds typically have predefined compositions that cannot be altered by investors.

    2. Smallcase vs. Direct Stock Investments:

    • Expert Research: Smallcase's in-house research team or partnered professionals conduct thorough research and analysis to construct portfolios. This research-driven approach provides investors with expert guidance and reduces the need for extensive individual research.
    • Diversification: Smallcases inherently offer diversification benefits by including multiple stocks or ETFs in a single portfolio. Direct stock investments require investors to carefully select and manage individual stocks to achieve diversification.

    • Time and Effort: Smallcase simplifies the investment process by providing pre-constructed portfolios. Direct stock investments require investors to dedicate time and effort to research, monitor, and manage their individual stock holdings.

    • Risk Management: Smallcases are designed with specific investment themes or strategies, which can help manage risk by spreading investments across various sectors or asset classes. Direct stock investments can expose investors to higher risk if they have an inadequate understanding of the market or limited diversification.

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      Benefits of Investing in Small Case

      1. Focused Portfolios: Small cases are curated portfolios of stocks or exchange-traded funds (ETFs) centered around specific investment themes or strategies. Investing in small cases allows individuals to focus on specific sectors, industries, or market themes that align with their financial goals and investment preferences. This focused approach can lead to potentially higher returns if the chosen theme performs well.

      1. Transparency and Control: Unlike traditional mutual funds, small cases offer investors complete transparency into the underlying stocks or ETFs within the portfolio. Investors can see the exact securities they own, enabling them to make informed decisions and maintain control over their investments.

      1. Lower Costs: Small cases often have lower expense ratios compared to mutual funds. Since they are based on direct ownership of securities, investors can avoid the management fees associated with mutual funds, leading to potential cost savings over the long term.

      1. Customizable and Flexible: Investors can tailor small cases to suit their risk tolerance, time horizon, and investment objectives. Whether it's a growth-oriented strategy, income generation, or value investing, small cases offer the flexibility to create a personalized portfolio aligned with individual preferences.

      1. Tax Efficiency: Investing in small cases allows investors to have direct ownership of securities, which can result in enhanced tax efficiency. Investors have more control over capital gains realization, enabling them to strategize their tax liabilities better.

      Risks of Investing in Small Case

        1. Concentration Risk: Small cases are often concentrated in specific sectors or themes. If the chosen theme underperforms or faces headwinds, the entire portfolio may suffer significant losses. Diversification is crucial to mitigate concentration risk.
        2. Market Volatility: Like any equity-based investment, small cases are susceptible to market fluctuations and volatility. Investors should be prepared for short-term price swings and consider their risk tolerance before investing.
        3. Lack of Professional Management: Unlike mutual funds, small cases are typically not actively managed by professional fund managers. Investors need to conduct their research and due diligence to make informed investment decisions.
        4. Transaction Costs: Although small cases have lower expense ratios, investors may incur brokerage fees and other transaction costs when buying and selling individual securities within the portfolio.
        5. Liquidity Risk: Some small cases may consist of less liquid securities or niche assets that could be challenging to buy or sell at desired prices, especially during periods of market stress.

        Conclusion

        Smallcase has emerged as an innovative and accessible investment platform, revolutionizing the way individuals invest in the stock market. With its theme-based approach, transparency, and user-friendly interface, smallcase offers a unique investment experience to both novice and experienced investors.

        By providing pre-constructed portfolios, smallcase simplifies the investment process, eliminating the need for extensive research and individual stock selection. Investors can benefit from the expertise of smallcase's research team or partnered professionals, gaining access to well-researched investment themes and strategies.

        Compared to traditional mutual funds, smallcase offers greater transparency, customization options, and cost-effectiveness. It empowers investors with the ability to build and manage their portfolios according to their preferences and investment goals.

        While direct stock investments provide investors with control and flexibility, smallcase complements them by offering a diversified and research-driven approach. It combines the advantages of expert research and diversification within a simplified investment platform.

        In addition to the advantages of smallcase as an investment platform, it's worth mentioning the availability of smallcases on the Wright Research platform. Wright Research is a renowned investment research and advisory firm that provides in-depth analysis and insights to investors.

        By offering smallcases on the Wright Research platform, investors gain access to a curated selection of smallcases that are backed by thorough research and expert analysis. This partnership combines the benefits of smallcase's streamlined investment experience with the trusted research capabilities of Wright Research.

        Investing in smallcases on the Wright Research platform allows investors to leverage the expertise and guidance of a respected research firm. The smallcases available on Wright Research have undergone meticulous scrutiny, ensuring that they are built on sound investment principles and align with market trends.

        Whether you are a novice investor seeking guidance or an experienced investor looking for well-researched investment opportunities, the smallcases offered on the Wright Research platform can be a valuable addition to your investment strategy.

        In conclusion, smallcase provides a convenient and user-friendly investment platform that allows individuals to invest in diversified portfolios with ease. By collaborating with Wright Research, smallcase expands its reach and provides investors with access to a range of well-researched smallcases. Whether you choose to invest directly on the smallcase platform or through the Wright Research platform, the availability of smallcases on Wright Research offers an added layer of expertise and analysis. Consider exploring the smallcases on the Wright Research platform to enhance your investment journey and work towards your financial goals with confidence.

        Read these comprehensive Smallcase How To Guides to understand all you need to know about Smallcases:

        1. Understanding What is Smallcase and How Does it Work?

        2. Features & Benefits of Investing in Smallcases

        3. 8 Things To Check Before Investing In A Smallcase Portfolio

        4. Should You Invest In Smallcases? Are Smallcases a Good Investment?

        5. Understanding the Importance of Rebalancing Your Smallcase Investments

        6. How to Use Existing Demat Accounts to Invest in Smallcases

        7. How To Choose Between Different Types Of Smallcases

        8. Understanding Smallcase Returns, Lock-In Periods, and Minimum Investments

        9. Understanding Smallcase Fees, Charges, and Taxes

        10. How to start SIPs with Smallcase?

        11. How Many Smallcases Should You Have in Your Portfolio?

        12. Where can I view my saved smallcases?

        13. How to Evaluate Smallcase Performance Using CAGR & XIRR

        14. Why Use XIRR Instead of CAGR To Evaluate Your Smallcases Performance

        15. How to Reinvest in a Smallcase You Had Once Exited From

        16. How to Partially Exit or Sell Individual Stocks in Smallcases

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        FAQs:

        1. How is Smallcase different from traditional investment options?

        Smallcase differs from traditional investment options by offering curated portfolios of stocks or ETFs based on specific investment themes, providing transparency, lower costs, and customization.

        1. What is the minimum investment amount required for Smallcase?

        The minimum investment amount for Smallcase varies depending on the specific smallcase you choose to invest in. It's calculated based on the price of the least expensive share in the smallcase and the minimum number of shares required for each stock.

        1. Is it possible to track the performance of my Smallcase investments?

        Yes, it is possible to track the performance of Smallcase investments through the Smallcase platform, which provides real-time updates on portfolio performance.

        1. How frequently are Smallcase portfolios rebalanced?

        Smallcase portfolios are typically rebalanced on a quarterly basis. However, the frequency of rebalancing can vary based on the specific theme or strategy of the smallcase. Rebalancing updates are communicated to the investors who can choose to apply these updates.

        1. Are there any tax implications to consider when investing through Smallcase?

        Yes, there are tax implications to consider when investing through Smallcase. As you directly own the stocks or ETFs, you are subject to taxes on dividends, short-term capital gains, and long-term capital gains based on your holding period and the type of securities you have invested in. It's advisable to consult with a tax advisor for specific tax-related queries.

        1. Is there any research or analysis available for Smallcase portfolios?

        Yes, Smallcase provides a comprehensive research and analysis for each portfolio. This includes information about the investment theme, the stocks or ETFs included, their weightage, and the historical performance of the smallcase. Each investment manager typically will provide some form of regular updates on their analysis and logic behind the investment decisions.

        At, Wright Research we regularly post updates and analysis of stocks, investments and our strategies. When you invest in smallcases on the Wright Research platform, you gain access to their in-depth analysis and insights.

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