A Guide to Smallcase: A Unique Investment Avenue

A Guide to Smallcase: A Unique Investment Avenue

When you invest in stocks, you need to select good quality stocks that have the potential to grow. Such stocks can give you good returns on investment. Moreover, a diversified portfolio is essential for risk mitigation and profit maximisation.

As such, you can pick individual stocks and create a diversified portfolio for yourself or look at readymade solutions like Smallcase.

What is a Smallcase?

A Smallcase is a basket of securities managed professionally, containing primarily stocks and ETFs (Exchange-Traded Funds). The basket is created based on a particular theme, investment objective, or strategy.

For instance, a Smart Beta Smallcase would invest in low-risk stocks so that the volatility is minimised without compromising on the returns.

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How to create a Smallcase?

You can open a Demat and trading account with any authorised broker to start a Smallcase investment. Motilal Oswal is a recognised broker. You can open an account with Motilal Oswal and invest in a Smallcase in one click.

You can also create a personalized Smallcase of up to 50 stocks. Choose the custom option and add stocks to make your own Smallcase.

SIP for Smallcases

While investing in a lump sum in a Smallcase, you can opt for the SIP (Systematic Investment Plan) route. The minimum investment required through SIP is ₹5000, and you can invest monthly, weekly, or even quarterly.

How to Start SIP for Smallcases?

Open a Demat and trading account with an authorised broker and choose the SIP investment mode. You can choose the SIP amount and frequency and start investing in Smallcase through a SIP.

Exiting from Smallcase: Is it possible?

While Smallcase gives you a readymade basket of securities, there is no lock-in period. You can sell your Smallcase and exit completely. There are two options for exiting a Smallcase –

  • Complete Exit – Complete exit means selling off all the securities in the Smallcase and exiting from the scheme. You can choose to do so online and redeem your Smallcase.
  • Partial Exit – Partial exit means exiting from the Smallcase partially. You can sell off individual stocks and exit from your portfolio partially while retaining the remaining securities.

Managing Smallcase investment – recommendations and tracking 

Depending on the broker you choose, you can get personalised recommendations for Smallcase. Motilal Oswal gives you investment recommendations that match your strategy so that you can pick the right Smallcase for your savings.

You can also track and monitor your Smallcase through the online portal or mobile application. Go to the ‘Draft’ section or the ‘Portfolio’ section and see your saved Smallcases. You can also edit and change your Smallcase through withdrawals or additional investments.

Smallcase returns

Returns from Smallcase are not guaranteed. They depend on the type of Smallcase you selected and the underlying securities' performance.

Charges and taxes for Smallcase

Investing in Smallcase incurs some charges that you should know about. These charges are as follows –

  • The subscription fee is paid to the expert fund managers who manage the Smallcase on your behalf to maximise returns.
  • Transaction fee – this fee is paid to the broker for every transaction done in the Smallcase
  • Buying or investing charges – for buying a Smallcase or investing more into an existing Smallcase, a charge of ₹100 or 1.5% of the transaction amount, whichever is lower, is levied.
  • SIP charges – if you invest through a SIP, a charge of ₹10 or 1.5% of the SIP amount, whichever is lower, would be levied.
  • Exit charges – when you redeem or exit from a Smallcase, these charges are levied

Depending on the service request you place on the Smallcase, there might also be other charges.

When it comes to taxation, Smallcase investments are taxed as stocks. Here’s the tax implication on redemptions made in a financial year without cess and surcharge –

Instance  Tax payable 
Long-term capital gains when STT (Securities Transaction Tax) is payable Returns up to ₹1 lakh are tax-free. Excess returns are taxed at 10%
Long-term capital gains when STT is not payable 20% of the returns earned
Short-term capital gains when STT is payable 15% of the returns earned
Short-term capital gains when STT is not payable Taxed at your income tax slab rate

So, understand what Smallcase is all about and how it works, and then choose a suitable Smallcase for a professionally managed and tailored basket of hand-picked securities.

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