What is Smallcase? Should you invest in that or not?


Have you heard of “Smallcase” yet? If not, no problem. I will tell you what is Smallcase and how it works.

If you invest in the Smallcase, you will get the straight holding of the individual stocks ties together in a portfolio. This is different from Mutual Funds. In Mutual Funds you don’t get ownership rights in the stocks you hold units in the portfolio.

That allows investors to exposure to expertly researched into a diversified theme-based portfolio with their existing Trading and Demat accounts. Seven brokers are currently offering this platform. Those are HDFC Securities, Kotak Securities, Edelweiss, 5paisa, Axis Securities and Zerodha.

How it works?

A brokerage account is must be needed to trade in smallcase. Smallcase Technologies has partnered with brokers HDFC Securities, Kotak Securities, Edelweiss, 5paisa, Axis Securities and Zerodha. A trading account and a Demat account is required because you will be investing in stocks directly. When you invest in smallcase, the money will debit from your trading account and stocks will credit to your Demat account.

There is no lock-in period your holding stocks and they can be sold any time. The minimum amount relies on the price and weightage of each stock in the portfolio. You can place buy orders for all stocks, which will be executed instantly according to liquidity.

In case some of the orders are not fulfilled because of illiquidity or other reasons, the investor will be given the option to ‘repair’ the smallcase later, where new orders are placed for stocks whose orders were not fulfilled.

Should you invest?

If you want to invest in the Smallcase, then you should have a long term vision. Because most of the Smallcase are designed as long term investment products. It might not give you an expected return for the short term. If an investor doesn’t have a longterm horizon, he/she should consider alternatives.

Smallcase gives better control and flexibility to the investor to modify the portfolio. And enhance his/her ability to influence the return. This may be a worthwhile choice for investors who wish to take part in themes, which is not properly represented in mutual funds.

This also provides a good start for first-time investors who want to have a long-term approach to creating Wealth.

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