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What is Smallcase? How to Use it in 2021?

Mashum Mollah 19 April, 2021

A Smallcase gives investors a new way of investing in stocks. It is an intelligently weighted basket that has up to fifty stocks that reflect a strategy, idea, or theme. A Smallcase is centered on three things which include; 

  1. A trending market theme such as an increasing rural demand
  2. A financial model such as zero debt
  3. Various risk profiles viz. conservative, balanced, and aggressive 

You can use a theme that you are positive about to select a Smallcase, invest in it within three clicks, and track and manage several portfolios seamlessly. Smallcases are not a means of advising or recommending investors. It is up to an individual to choose a Smallcase. 

The first way to invest in the market is by purchasing individual stocks via a broker. You can also put your money in exchange-traded funds or equity funds. Brokers are now giving investors an opportunity to purchase an entire stock portfolio and build around a curated theme within a single shot. There are so many ways that investors can benefit from this emerging alternative. 


Smallcase Founder

This investment opportunity is based on a platform that was designed by Bengaluru-based Smallcase Technologies. The avenue gives investors a chance of taking exposure to professionally researched and diversified theme-based portfolios with their current trading & Demats accounts.

Several brokers are currently offering this platform all over the world. It allows investors to hold the underlying securities in their Demat accounts and they have full control of the Smallcases because they are integrated with their trading accounts.

How Does a Smallcase Work?

How does Smallcase work

It is not hard to understand how Smallcases work. It is even much easier for people who have been trading in the stock market to understand. The first step is to access the Smallcase platform that is offered by the broker. The second thing is to select a theme that you love most.

You can see the stocks that build up the portfolio, the available proportion, and also the investment rationale. Investors can customize the Smallcase by either removing or adding stocks. For example, you may wish to build a portfolio of companies that benefit from rural consumption.

In such a case, you may invest in the Rising Rural Demand Smallcase, which is a readymade portfolio that has around 15 stocks that derives a chunk of volumes or revenues from the hinterland. Some brokers offer Smallcases that are curated while others allow you as an investor to create your own Smallcases. 

After finalizing the above section, you can go ahead to purchase the Smallcase. The lowest amount depends on the weightage and Smallcase charges of the individual stocks in the portfolio. The platform puts purchase orders for stocks that are executed with the immediate effect depending on the liquidity.

If some of the orders fail to be fulfilled due to liquidity or any other reasons, you as an investor will get the option of repairing the Smallcase on a later date. In this case, you will place fresh orders for the stocks whose orders were not fulfilled. Repairing will make sure that the portfolio will match the original theme.

All Smallcases are normally rebalanced periodically. In most cases, this is normally done quarterly. It makes sure that the portfolio only has companies that are true to the broad theme. As a current investor, you can rebalance the portfolio by purchasing the incoming names and then selling the outgoing companies in a single shot. 

You can also exit the whole Smallcase at any given time or sell the individual stocks in the Smallcase separately. The investor can also set up a SIP in every Smallcase where they may put a fixed amount each month in the portfolio of their choice after the first investment. With this knowledge, you now understand how Smallcases work. The next step is to consider whether Smallcases are worth your consideration.

Are Smallcases Worth Your Consideration?

Are Smallcases worth your consideration

When you are buying stocks from the brokers directly, you will retain control over what goes into your portfolio but you have to execute the trades separately. It can be quite tricky to identify good quality stocks. 

When you take the route of the mutual fund, you will have convenient access to a diversified and well-researched set of stocks even though it comes at a higher cost. It does not also give you control over the composition of the portfolio. 

Investment via the Smallcases is normally a middle ground. It gives you more flexibility and greater control of modifying the portfolio as an investor. It significantly increases the ability that you have to influence the return. 

It is a brilliant option for those investors who would like to participate in ideas or themes that are not represented in the mutual funds adequately. For example, people launched Smallcases in Affordable Housing, Smart Cities, and GST Opportunities when it was not affordable to participate in these themes by mutual funds.

It also gives first-time investors an excellent starting point especially if you wish to pursue a long-term wealth creation strategy. Returns from these Smallcases have remained to be a mixed bag. 

Portfolio Rebalancing

The facility of rebalancing portfolios at regular intervals solves the big question for the direct equity investors because they get to know when to sell. By giving you timely re-balancing, this platform makes sure that investors sell their stocks at the appropriate time and also enters the best stocks. 

However, since the nature of this approach is thematic, the avenue suits the needs of savvy investors perfectly. It requires people who understand the underlying themes and can keep trends of them all. The focused theme exposure can backfire if it does not play as expected even via a diversified stock basket.

However, mutual funds should remain as a preferred option to equities for those investors who are less involved. As of now, you can only add stocks that traded on the stock exchange to the Smallcases during the creation, management, and customization. All small cases comprise of the stock exchange stocks only.

When you purchase stocks through the small cases, they will always reflect on your portfolio. When you place any sell or buy orders on small cases, they will reflect in your portfolio on the next trading day.

How Long Can You Hold Smallcases?

How long can you hold Smallcases

There aren’t any recommendations on when to buy or sell Smallcases. As an investor, it is up to you to determine the theme that will work for you and when to sell or buy. The stock selection for a theme for the Smallcases results from a well-documented research process and you have to make sure that the stock that you select represents the particular theme aptly. 

There are times when markets under or overreact to events in the short run and this auto-corrects over time. You can make higher profits by selling after or before an event. You will get a notification once a small-scale theme that you hold has played out completely or the factors that drive a specific model/idea have changed. 

Smallcase vs. Mutual Fund

Smallcase vs Mutual Funds

Smallcases are stock portfolios that reflect a theme in the market. These Smallcases, unlike mutual funds, give you exposure to the trending market themes and investment strategies, and styles. Smallcases are also inexpensive, liquid and they are centered on relatable themes. 

Investment in the stock market has helped several people to accumulate a lot of wealth. However, we also have other people who have lost all their savings in the same market. Therefore, some stories about investing in the stock market are exciting while others are not.

Some individuals enter the stock market as retail investors. However, most of them go for equity mutual funds in order to form a long-term portfolio. Equity mutual fund investors, over time, invest in shares directly as they try to strategize and optimize for long-term gains. 

How Do They Resemble One Another?

The goal of both mutual funds and Smallcases is to produce capital gains, generate income, or accumulate sustainable wealth. A mutual fund is basically a collection of pooled cash for investing in assets like bonds and stocks. A Smallcase, similarly, is a basket of stocks that are based on ideas or themes, or choices.

It is a mix of choices, stock research capability, money to invest, and investors’ goals. Both of them also reduce the risk on investment because you don’t invest in a single stock but diversify in bucket items.

How Do They Differ?

Difference Smallcase vs Mutual Fund

Mutual funds are run by AMC and the investor owns the Fund Units. A Smallcase is a theme-based or personalized investment and the investor owns shares. Therefore, as an investor, you are a shareholder of stocks that constitute the Smallcase.

When the stock company offers rights issues, dividends, or bonus shares, the investor will gain directly.  In Mutual funds, the investor isn’t a shareholder in the stock company hence he will not get such options.

Secondly, mutual fund investors have to comprehend extra specific terminologies. Examples of these terms are Dividend reinvestment options, AUM, NAV, Expense Ratio, and Exit Load among others.

You also need to understand fund types based on Small Cap, Mod Cap, and Large Cap boundaries. These factors are not applicable when you are dealing with Smallcases. In a Smallcase, advisors and investors engage more in investing in a theme or idea to maximize their wealth gains. 

Thirdly, mutual funds hold a particular percentage of cash from the pool to sustain redemption meaning that it can hurt the potential performance. All the money that you put in Smallcases will remain invested until you redeem it. 

Mutual fund trading normally occurs before the fund cut-off time and you calculate the units that are received in the day’s NAV. This typically comes later on in the day after the market has closed.

A Smallcase has better control when it comes to using the dips on a given investment day. When dealing in mutual funds, you typically reinvest the dividend payout the same day. However, in Smallcases, you can control and time the market to get the best outcome. 

The other major difference between Smallcase vs. Mutual Fund is with regard to transparency. The fund manager is the one who knows all the stocks fund has invested in and makes decisions on behalf of the investor.

The investor can like the stock or not but it is something that you cannot control as an investor when dealing in the Mutual Fund. Most investors will analyze the top ten stocks that the Mutual Fund is investing in.

However, they find it hard to read the monthly reports and analyze all these stocks. A Smallcase is more of a maintainable bucket and allows investors to re-balance by moving stocks out and in the bucket with higher freedom. 

Lastly, the amount that you need to invest in a Mutual Fund is lower than what you need for Smallcase. However, the expenses of investing in Mutual Funds are seemingly higher than that of Smallcase.

Apart from the brokerage fees, Smallcases have no additional fees. In case there are similar negative returns, investors tend to lose a little more in Mutual Funds in comparison to Smallcase because of the annual expenses that characterize the Mutual Funds. 

Smallcase Charges

Smallcase charges

Brokers charge investors a one-time charge of RS. 100 when they invest in a Smallcase for the very first time. These transactions also attract the normal charges for brokerage.

There are no additional charges for extra charges for further orders within the same Smallcase apart from the fees of executing the trades. The best Smallcase bargains buy yielded a return of 135% in the past three years. However, growth at the fair prices yielded 43 percent hence lagging behind the average and nifty equity fund. 


From this article, you now understand the differences and similarities of Smallcase vs. mutual funds. It is the only way you will be able to tell which one is the best investment option. It all depends on your financial ability and investment goals. 


IS Smallcase Free?

Smallcases have no charges when you are simply watching, listing, or viewing them. However, you are charged when you are transacting in these assets. 

Is it Good to Invest in Smallcase?

Smallcases form great investment opportunities for the well-informed investors. However, equity penetration is low in several countries and common men still don’t participate in a variety of products such as mutual funds. 

Is Smallcase App Safe?

This is like selling or buying mutual funds with no need of a fund manager which makes it cost-effective. It is like ETFs but because there is little about ETFs in India, it makes a lot of sense. However, since you are purchasing stocks, you cannot run away from the market risk. 

IS Smallcase Better Than Mutual Funds?

Smallcase gives investors better control in using dips on the investment day. In mutual funds, you typically reinvest the mutual funds the same day. Smallcases allow you to time and control the market in order to get a better outcome. 

Which is The Best Smallcase?

Some of the main Smallcases in major stocks are SBI Life Insurance Company, ICICI Lombard General Insurance, and ICICI Prudential Life insurance among others.

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Mashum Mollah

Mashum Mollah is a tech entrepreneur by profession and passionate blogger by heart. He is on a mission to help small businesses grow online. He shares his journey, insights, and experiences in this blog. If you are an entrepreneur, digital marketing professional, or simply an info-holic, then this blog is for you.

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