Investment services provider, Geojit Financial has just launched two unique equity baskets based on customized indices created by benchmark creation pioneer, MSCI. The nascent curated stock space has different players in the form of registered investment advsiers, brokers, aggregation platforms, etc. In this article, we review Smartfolios, a data-driven platform from the house of Kochi-headquartered Geojit.

What are Smartfolios

Smartfolios by Geojit is a professionally managed online platform that offers you readymade baskets of stocks curated by experts. These are designed to help you invest based on your investment appetite and outlook to achieve your financial goals. The online platform can be accessed through the website or app. Readymade investment baskets are for investors who don't have the requisite skill to identify stock opportunities on their own. At this moment, there are 16 baskets, including 'Select' and 'LMS', both are based on custom MSCI indices. There is also a DIY (Do It Yourself) option in Smartfolios. As per the website, minimum investment, where mentioned specifically, ranges from Rs 1.5 lakh to Rs 2 lakh. The higher end of minimum investment is Rs 5 lakh.

To access Smartfolios, you have to open a trading account with Geojit. When we clicked the website link for opening an account, it took us to the Geojit demat and trading account creation page where the nitty gritties such as zero account opening charges, zero AMC till March 2023, Rs 20 per intra day order, etc, were mentioned. Once back in the Smartfolios website, you can choose the baskets based on your equity risk appetite (aggressive, moderate or conservative) or investment mode (lumpsum or SIP). You also have to confirm the automated investment recommendation. You may need to validate timely recommendation on automatic rebalancing/ revamping of the stock basket too.

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Investing in select baskets

Classic: Basket that represents Geojit top picks with weightage towards multi-cap stocks and exposure across multiple sectors.

Defensive: Basket which gives more weightage to Defensive stocks, especially in the Large Cap Space.

Alpha: This basket consists of quality stocks and represents Geojit Research’s top picks from various sectors, with major allocation to Large Cap stocks.

Vision: This is a scaled down version of the 'Geojit Alpha', with a lower investment amount.

Magic: Basket of stocks for investors having moderate risk profile. Allocation mainly into Large and Mid Caps with small portfolio to quality small caps.

Prime: Basket of stocks for investors having conservative risk profile. Allocation is mainly into quality Large caps with some exposure to Mid and small caps.

Ace: Basket of stocks for investors having an aggressive risk profile. Higher allocations to quality mid and small caps.

Prestige: Analyses and picks stocks on the basis of events like M&A announcements, earnings surprises, order book wins, corporate events, etc. Allocation is mainly into Small caps with some exposure to Mid and Large caps.

Souther Icons: The objective of this basket is to invest only in South India based companies. It is a passively managed multi-cap basket.

24 K: Invests in Gold ETF units.

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Costs involved

Though these baskets are readymade portfolios, there is no expense ratio involved --- a term you have heard in mutual fund portfolios. Similarly, there is no entry or exit load, just the brokerage and its associated charges. The brokerage rate is a minimum of 0.5 per cent of transaction value. For NRI clients, the minimum brokerage will be 1 per cent.

Based on the investment strategy, the investible amount will vary for the investor. Investors can add money to the existing investments - this can be done by payments made via ledger balance available in their trading account or by transferring additional funds to the trading account via Net banking/UPI.

One can also withdraw funds at any time; there is no lock-in period.

Execution of stock SIP orders are sent to exchange at 'market price'.

Do note frequent selling of stocks may lead to short-term capital gains or losses.

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What's hot, what's not

Smartfolios by Geojit is an example of how brokers are trying to create a stock basket ecosystem for their exclusive customers. This is a closed system in the sense that investors may like the stock picks or the portfolio, but will have no flexibility in terms of executing the same elsewhere.

Players such as smallcase and WealthDesk do the job of aggregators. Since many investment advisors and brokers are enlisted with them, they offer greater variety and choice. Also, you can execute the trade on a platform of your choice. For instance, just because you have an account with Zerodha, it does not mean you want to buy an equity basket under it. You can do it under your 5paisa account, for instance.

Full-service brokers such as ICICI Securities (ICICIdirect) have tied with masters of the street such as Shailendra Kumar (Narnolia), E A Sundaram (o3 Bhuvi Advisors), Pankaj Murarka (Renaissance), Rajesh Kothari (AlfAccurate), Vikas Khemani (Carnelian) and Sunil Singhania (Abakkus). You can invest in curated baskets advised by them by subscribing to various portfolios.

As an investor, the benefits you receive in case of a broker's curated investment basket or on baskets on aggregator can be different. First, the broker may not charge any advisory fee upfront from clients. But they will charge brokerage to execute (on buys and sells). Second, in case of aggregator-led curated platforms, they may make some of the baskets free in terms of access and execution; with many discount brokers these days offering zero brokerage on delivery orders, the actual costs go down to almost zero in some cases. However, do note that good investment advisors, belonging to fund managers of repute, charge hefty fees, which can easily run into thousands annually or 2-2.5 per cent of investment value.

At this moment, Smartfolios by Geojit can display much more information about the specific investment baskets. Right now, there is a 3-4 line strategy description, mention of benchmark, review details, minimum investment in some cases and explicit mention of the investment mode only. Compared to this, smallcase or WealthDesk offer performance/ return details, full details on methodology, factsheet, graphical representation of past performance versus category indices/ peers, manager details and much more.

The performance of Smartfolios offered by Geojit should be keenly watched. Investors should understand not just the absolute performance, but also how such performance is calculated to have a better handle on this matter. On paper, the curated stock portfolio space has players that are regulated by SEBI. But unlike AMCs, MFs, PMSes or AIF vehicles/ structures regulated by SEBI, a curated stock basket is a confluence of brokers, investment advisors, research analysts and platforms. Hence, the industry operates on best practices but there are no guidelines for how the curated basket space should operate.

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