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Technology is known for bringing price disruption benefiting consumers. A one of its kind low-cost investment model developed by smallcase, an online portal registered with the NSE, has started giving mutual funds a run for its money.
smallcase enables retail investors with their existing trading and demat accounts to invest in a portfolio of stocks and ETFs (called smallcases) based on certain themes. The SEBI-registered professionals, who develop a model portfolio for a price to be borne by investors, are called publishers.
The Bengaluru-based company has tied up with leading broking firms HDFC Securities, Kotak Securities, AxisDirect, Edelweiss, Zerodha and 5Paisa.
The only recurring cost for smallcase investors is the 0.30 per cent brokerage. Investors can buy a smallcase portfolio with a subscription fee of as low as ₹150.
Stocks bought through smallcase portfolio are directly credited to the investor’s demat account, while investors have the option to skip the portfolio churn suggested by the publishers.
Ease of control
Dharmendra Jore, a banker and smallcase investor said one can have complete control of their investment and book profit at their ease, while in mutual funds it depends on the fund manager to distribute profit as dividend.
On most occasions, mutual funds retain the profit in the scheme for valuation and shore-up the assets under management (AUM), he added. The registered user base of smallcase has jumped multi-fold to four lakh from 1.5 lakh logged last July, while the transaction value has touched ₹2,200 crore from ₹1,000 crore registered last year.
The company charges broking firms a flat fee of ₹100 on every smallcase bought and is also contemplating to seek a portion of the revenue from the publishers.
Large- and mid-cap smallcases have delivered a return of 43 per cent and 42 per cent, respectively, over three years against their benchmark Nifty-50 and Nifty Midcap-100 return of 31 per cent and 11 per cent, respectively. Small-cap investments had been more profitable at 17 per cent while its benchmark Nifty Smallcap 100 was down 5 per cent.
Vasanth Kamath, co-Founder, smallcase, told BusinessLine said the process of Investment Products including selection and weighting stocks is more quant driven without any manual intervention.
For instance, he said, though many users have shown interest in a green/renewable energy smallcase, the company has not yet created one because there are not enough number of good listed companies in this space.
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