Zerodha Smallcase Review
Before jumping into the review of Zerodha Smallcase, we need to understand what exactly is smallcase? How does it help in investments? Why do we need it and so on! Basically, Smallcase is an equity investment platform, designed specifically for retail investors taking into account two prominent investment strategies - themantic and portfolio based investing.
Wait, what is themantic investing?
Themantic investing is basically investing in the changes we see around us. These changes could be anything such as changes in the mindset of people towards branded products, new infrastructure developments around specific cities or types of cities of the country, change of government policies towards any particular domain such as smart cities, metros, powertrains, the introduction of GST etc.
Alright, that makes sense! What about Portfolio investing?
Portfolio investing focusses on a set or sub-set of stocks instead of a specific stock or two. For instance, due to the growth of e-commerce in India and inclusion of demonetization recently, the market has seen recent improvements in the stocks of banking space, simply because major retail purchases are being done online. And thus, a lot of banks have gained traction in terms of value to go along with high cash assets.
The graph above is basically telling that the stocks within this theme, once invested together through this theme via Smallcase, would have given 40%+ returns in 2 years time. Users can view the returns percentage for durations of 1 month, 3 months, 6 months, 1 year along with 2 years.
Similarly, there are around 40 such themes that contain a mix of stocks that can get impacted by external situations and opportunities. Each of such themes contains 15-20 stocks based on the research done.
This shot gives an idea on the kind of return you can expect in as less as 1 month to as high as 1 year to go along with the minimum investment amount you need to invest to see that percentage growth.
This is fine but, How is a smallcase theme built?
As per the team from smallcase, they would go through the following process while they build a smallcase:
- Start at a very broad level and wonder across all stocks listed on the stock market
- Detailed research on the numbers, indices, external situations that can potentially impact industries, geographies to boil down to a theme topic.
List down specific sectors, companies that can get impacted by the industries of the theme selected above. This requires the research team to figure out which particular companies are inclined towards what kind of models and whether the selected theme topic will impact them or not. It's not mandatory that every company in a particular industry will get impacted and thus specific companies get picked out.
Thus, small cases present potential investment opportunities based on a decent amount of research done on the subject. It also tells what you can potentially expect in terms of percentage returns along with the investment period and minimum investment needed.
Pricing of Zerodha Smallcase
How Zerodha Smallcase works?
Since smallcase works in partnership with Zerodha, thus, first of all, you need to have a trading account with Zerodha. You can open the trading account with Zerodha by providing your details here.
Once you have selected smallcase(s) for your investment, you need to go to the smallcase page. Once you are there, you need to click on 'Buy Smallcase' button as shown below:
Yea, but everything cannot be good with it, right!
Disadvantages of Zerodha Smallcase
There are few concerns with the platform, such as:
- Available only in Equity segment
- Incomplete integration with Zerodha Kite Platform
Advantages of Zerodha Smallcase
Further, it certainly provides the following positives for investors or beginners:
- Users can customize a smallcase, add new stocks or remove some of the existing ones as per users' preferences.
- You don't need to go through any fundamental research on your own. That part is already taken care.
- Diversifies your investment across industries, company stocks and keeps minimal risk on your initial capital.
For the rest of the review, you can check complete here more about Zerodha SmallCase