If we want to invest in stocks then what are the options we have in today's date. There are only two options, first, we can invest directly in the stocks and the other can be done through Mutual Funds. Small case comes a third and very good option, so first of all we will see what are the advantages and disadvantages of Stocks and Mutual funds. We will talk about the advantages and disadvantages of how a small case can add value here. Then we will understand what is a Small case, how small is designed, and then a question always comes in the mind of people that if a product is good, then perhaps its pricing will be high, then we will also talk about it, We will talk about it's charges, In fact, they have a new update, their premium subscription services have also started, what is that, we are going to talk about that too. After this, we will see a live demo that if we want to invest in Small Case, then we will see how to select Small Case and how to make your strategy. Finally, we will also see what is Rebalancing, Now I couldn't find all these details in any blog or video, so I thought, that I must make a detail tutorial on small case, in this video we are going to cover A to Z of small case, it will be very interesting, Stay tuned.
Advantages & Disadvantages Of Direct Stocks & Mutual Funds
Let us first look at the advantages and disadvantages of direct stock investing and mutual funds. If we talk about direct stock investing first, then when we invest there we have an expectation that the number of returns Nifty or Sensex is giving, then we must get more returns then that, if we take an example, That on the average Annual return of nifty in last 10 years has been 14% So we should earn at least 15 to 20 percent here, So, if we have the expectation of such high returns, then we will have to work extra hard for that, it means, that our Expertise should be a little more, now, along with Expertise, we should also have active involvement in it. That, this is an active investment where we have to invest our time too. So if we put our effort and time, then obviously we are benefited here. We can get better returns and secondly, that we do not have to pay any fees, like we have to pay some fees in mutual funds and along with this the control remains in our hands, as to we have complete control over which stocks to invest When not to invest, when to sell. So, this was all about direct stocks. Now let's talk about Mutual Funds. In Mutual Funds, if we talk about returns, then there you will see that on average, there are fewer returns than Nifty, 90% of mutual funds. So if we go by our old example, if suppose Nifty has given average annual returns of 14% in last 10 years, then in mutual funds, you won't get returns of more than 12 to 13 percent, And why is this, so It's because of two reasons, firstly, because mutual funds always ask for some fees, which we call expense ratio. it's around 1 to 2%. Then it will be deducted from your returns second, There is also an inherent downside to mutual funds that they cannot hold as much Cash. SEBI's requirements are such that they have to invest most of the money in the market, they can hold only a little money in it and that too for liquidity, if someone withdraws money from mutual funds, then only for that cash is held, So, because of these two reasons, the returns of mutual funds, if we invest money in direct stocks, then our expectation is a little less than that, but on the other hand, it is also an advantage, we do not need any expertise in mutual funds. someone is managing our fund, and he is charging 2-3% for that, then there is no requirement of expertise here. Second, this is not an active involvement here, that is, you don't even have to spend your time here, but along with this, it is also a drawback that it is not in our hands like we do not have control over these investments Only the manager will decide when to sell the stocks, which ones to buy, how many to sell, you have no control, you have given him money and he will manage your money and the second drawback is we have already talked that here your fees are more. Your expense ratio is up to 1 to 2%. So, this was about direct stocks and mutual funds.
What Is Smallcase?
Somewhere between these two comes Small cases, so if we want to understand this, then we go by comparing it with mutual funds, suppose you have given money to a fund manager. Now what will he do, suppose he has invested your money in 20 stocks, what he's doing, eventually he is putting your money in a portfolio, he is charging you 1-2% for that thing, now Suppose an expert of the same method, coming to you and saying that I am telling you a direct portfolio, you buy stocks yourself, and I will charge you very little money for that thing, now, mutual funds cost a lot but on the other hand, an expert comes, and he says that my qualification is the same, I am a SEBI registered investment advisor, and I will design a very good portfolio for you and if you want, you can compare its returns with Nifty, we are confident that with our strategy, we can best Nifty every year, if Nifty is giving you 14% then in our portfolio you can get returns up to 17,18 or 20% So if we go to the parameters of our old comparison, what can we expect in the small case, here, we can expect a return of 15 to 20%. Like we are expecting in direct stock secondly, here also you do not need any special expertise, here, you have an expert and you can copy his portfolio. Third, your involvement here will be a little more than your mutual fund. But it will be very less than direct stocks, you will not need to do much research, so in this way we get a lot of control which we do not get in mutual funds because all the stocks are included directly in your Demat account. So you can buy them whenever you want, you can sell them whenever you want, you can also rebalance in the way the expert is advising you. we will talk about this very soon, and if we talk about the final parameter, then like we talked about earlier, here our fees very less, so if I summarize this, then the Small case is a model portfolio, which was made by an expert. Which you can directly copy in your Demat account, you can copy its strategy directly and for that you incur very nominal charges.
How Smallcases Are Designed?
Now the question arises that in what way these Small cases are designed, and what options we have, see the way mutual funds are designed, Small cases can be designed in the same way. So if we want to wonder here how Small case designed, Small cases are designed on ideas, on themes, or on strategies, then any expert who is designing it, what stratify is he using? they tell you upfront that this is the strategy we've designed it.
What Are The Charges of Smallcases?
Now let's talk about the charges, how much does the Small case charges? See, till now it was charging very simple whenever you buy a Small case transaction, you were charged only 100 rupees, but now Small case has a premium subscription, For their premium Small cases, you are paying a one-time fee, you can check all the stocks in it. So here, Windmill Capital is a sister company of Small Cases, that has made more than 42 Small cases, so when you take this premium subscription, then, you can check all your small cases, that is, how many stocks are there in them . What is the weightage, you can see all those stocks, then if you want to buy, then you can buy those stocks even in your Demat account, otherwise, their small cases as soon as you click on the invest button. Even then it will come in your Demat account.
Zerodha Smallcases Demo
So, to explore these small cases, I have given the links in the description below, If you click on the link , then you will see a page something like this, we will first log in here, so whoever your broker is, they have tie up with all these brokers, whichever broker you have an account with, you can log in through them. for example, if I want login through Zerodha, then I will enter my username here, I will enter my password and I will enter my PIN, after login, we will get to see some page like this But look, you see different collections, you can come down here and see what kind of collection are there, there are some small cases for new investors there are ETF small cases, ETF means exchange traded fund so these are very low cost funds, like in Mutual Funds your expense ratio is high Here expense ratio is very low, and you can invest in different instruments. Like you can put some money in debt, some money can be put in equity, some can be put in gold, then you get small case of ETF too, it's showing 6 Small cases here, there are some small cases for long term. There are sector trackers like any specific sector you want to invest in if you want to invest in any business house small case. there may be a small case of Tata House.
What Are The Different Type Of Smallcases?
So, these types of themes are there for you, here you can go in All Small cases, here you will get all the small cases, here you can apply filter on investment amount if you want to select under 5,000, if you want under 25,000 or according to how much minimum investment we want to do, we can select here, according to Volatility, you can select small cases here, Some small cases can be highly volatile as in if they have too many stocks that go up and down a lot, they will be high volatile small cases. On the other hand, if there is a balance small case in which it has good portions of Debt and Gold, then its volatility will be very less i.e. it will continue to grow slowly and steadily. but usually, its returns will be slightly less.
How To Select Smallcases By Investment?
So according to this we can also choose it can also choose according to the launch date, but the most important is the investment strategy here, according to me, you must know this very well like if you are investing strategy according to the asset allocation. If you want to select small cases, then you will click on it, then you will see some small cases here like this is equity and gold, then here the asset allocation will go in equity and gold. All-weather investing, here investing will be in every way, some money will go in gold, some money will go under debt, some will go in equity. then, there are Top100 stocks in which some of your money goes in Nifty 50, the rest some money goes in Nifty Next 50, So in this way you can select it. then you can invest in dividend paying in small cases, so these small cases you are seeing here, stocks with very high dividends are selected in them. ESG can be a theme. ESG such as the companies which focuses within Environment Sustainability All Governance, the companies that try to reduce their carbon footprint what kind of small cases are available for such companies, you can see that here, then there can be fundamental's, if we remove them, what are the small cases for the long term, you can see that in fundamental, you can see here the height for growth mall case, you can see high quality stocks and quantamental means Some small cases are made by mixing quantitative and fundamentals. then, there is Sector tracker, if you want to put in IT, Auto, or Banking, Technically i.e. trading wise there are some small cases some stocks are selected for short terms, then Thematic investment can be done, if we remove for fundamentals, like Banking Privately Transporting India i.e. the stocks which focus on the transporting sector of India can be something hat way, affordable housing can be a theme, then we have some small cases for value investment so in this way, we can choose our small case according to the investment strategy.
How To Invest In Smallcases?
Let us now see what type of details we get here, Suppose we want to invest within growth, want to see the small cases of growth, then see here we are getting a small case of growth and income, suppose we want to invest in it , then I will click on it, so, here we can see they are showing methodology first, in which way this small case has been made i.e. here some growth stocks have been added here, and some companies which pays dividend very well are added here, the performance you can see here, because there are more small cap stocks, So, it is comparing with Equity Small cap here what we can do , we can compare with Equity FD & Inflation compare, So, see the average return given in this small case is 38.79%, this is very good returns as compared to the average returns of equity which have been only 14%. We have given 6.6% in fixed deposits and our inflation has been 4.19% so you can see here, returns are very good here, so if we want to invest in it then we can directly click on the button on Invest Now, and we can invest in it. And after all, who has created this small case, that too is mentioned here, created by windmill capital which is a subsidiary of small case. Now here if we go into its stocks and weights, then you can see all the stocks and how much percentage, will our money be invested, if we click on Invest Now, You can see it's 5 years CAGR, The annual return of 5 years is up to 24%. So here we have seen an example where we can easily see the stocks and weights here. Windmill Capital, which we talked about earlier, has more than 42 small cases. So let us now look at another example, and see whether the stocks are visible to us or not. Let's go back to Discover Small cases and here we come to All Small cases, and let's say I want to invest in specialty chemicals, here in Pharma I think that might be a good theme, this is also Windmill Capital's small case let's click here, If here, I want to check stocks and weights, so first of all it is telling me start subscription, That means, its stocks and weights are not visible to me, this is not a free small case here we will have to buy a subscription, so, what kind of plans we get here, we can see here in See all plans and benefits. Look, all the small cases we have from Windmill Capital, for that, we have to pay one time payment and how much, we have to pay 6,000 for 1 year. After that, all the small cases, all the portfolios available here, will be visible to us. Why did they do this, it is clearly understandable, That many people directly see the stock and their weights and can directly copy them in their Demat account, so that's why they have bundled all the premium small cases under one premium subscription. Although even after that I don't think it is too much cost for 1 year if we are giving ₹ 6000 then it takes around ₹ 500 a month, along with this, you get a lot of small cases, in whichever theme you want to invest money you can, then it is a matter of fact that we will come to know all the small cases that where we must to invest.
How Rebalancing Works In Smallcase?
the second important thing is Rebalance Updates. I would like to talk to you now about, Rebalancing is very important. Why because when we wanted to buy small cases then we bought them, but when we must sell them, we should also know that. So the meaning of rebalancing is same, in whatever small case you are investing in, you can get quarterly updates, like those which are very long-term, you get quarterly updates in that, that means you will get Rebalancing update within 3 months on Small case application. So at that time you definitely have to rebalance, as soon as you click on rebalancing, all the stocks that have to be sold will be sold and the number of stocks that have to be bought extra or if weightages have to be increased, it will increase within a single click. So, rebalancing becomes very important because any investment expert the investment advisor is constantly tracking the market, he is telling you through rebalancing that now you must sell some stocks and some stocks should be bought all and their weighting can change, It's done with a single click. and whenever we see the returns in the small case, the Annualized Returns we see here, are done by factoring Rebalancing, that's why whenever you buy a small case, you must do rebalancing in it. Whenever we get an update and all the small cases with a short term, then you can get weekly updates in them, you can get weekly or monthly, so this was our small case detailed tutorial, I have tried to cover all the details here for you. Small Case, I think it is a very good product because here we can get the same returns as we get in direct stocks, along with an expert's advice, we don't have put much time here, we get this advice for very little money.
Till then keep learning, keep earning, and be happy as always.
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— Karan Tiwari (@kt_creators) December 6, 2022