Smallcase - Your personal mutual fund
Startup
India’s favourite investment instrument has always been Fixed Deposits, Gold, PPF, Post Office and other fixed-income instruments that are all considered safer than equities.
Three IIT KGP Alumni Vasanth Kamath, Anugrah Shrivastava and Rohan Gupta saw this as an opportunity and launched Smallcase in 2015.
Equity investments have always been seen as risky by most Indians. This is evident from the fact that only 4% of Indians have a Demat account and invest in the stock market. Compared to the 12.7% figure in China and 55% in the US, the image is quite stark. But, it also means that the scope for growth in the Indian equity market is immense.
Fintech will drive the penetration of equity
To address the riskiness of the asset class and to get more households to realise the true potential of wealth creation, multiple fintechs have solved multiple problems. Zerodha single-handedly solved the issue around high transaction costs and low transparency by building an extremely powerful technological infrastructure and adding products that they felt would aid the user in their investment journey.
Zerodha’s early bet
One such example is the Smallcase platform, which was backed by Zerodha and went live 5 years ago in July 2016 with the aim to change the way urban India invests. The idea was to create and offer theme and strategy-based portfolios to individual investors. It not only offered premade portfolios but also allowed investors to create portfolios of their own. Over the years, we’ve seen increasing participation in equities as an asset class.
Smallcase to take on big guys
In 2018, Smallcase opened its platform to Registered Investment Advisors, providing them with a platform that helped them provide tech-driven automated investment advisory to retail investors.
This was a shift in strategy, from being a service offering platform to being a platform that facilitated transactions between retail investors and RIAs. This made Smallcase a direct competitor with the behemoth mutual fund and portfolio management industries.
The Smallcase tale in numbers
As of March 2021, Smallcase had 28 lakh registered users, growing at 200% between 2020 and 2021. It has tied up with 12 broker platforms with more to come. Smallcase was valued at INR 374 crores as of December 2020 and is backed by investors like Sequoia, HDFC Bank and DSP
Mutual funds vs Smallcase
Smallcase revenue model
Revenue sharing and listing fees from Investment Advisors listed on the platform
Charges on accessing Smallcases which are portfolios designed by Windmill Capital
Subscription charges from Tickertape which is a first of its kind stock screener for Indian stocks that lets users analyse and screen stocks based on a large number of technical and fundamental factors
Most popular advisors on Smallcase
Windmill Capital (Smallcase’s in house advisory)
Weekend Investing by Alok Jain
Capitalmind
Wright Research
Green Portfolio
It's an interesting investment product and like Einstein said, "He who understands compound interest earns it, and one who doesn't, pays it." Happy Investing!
Policy over leader: Extremism is not the only option
Opinion
Today, we are living in a world that is seeing an extremely polarised society. The fact that it doesn’t even take five minutes to trigger someone politically shows that our ‘Janta' has fallen prey to this polarisation.
Everything has to be either love/hate, right/wrong, deshbhakt/anti-national & black/white. However, there’s a grey area which needs to be recognised too!
Rational option: Be objective!
Unfortunately, this ‘love-hate’ relationship that we’ve formed with our leaders has created a binary, leading to a great degree of prejudice.
In this herd-mentality of loving or hating politicians, we seem to have forgotten how to evaluate what really matters - the policies! Think of it. How many times do we really dig in and see what a particular policy entails?
Most of the time people make a blanket statement based on their impression of the leader who’s proposed it? We need to be objective with the policies and not the state.
You can like some things and dislike others
As Individual Objective Voters, we have the liberty to pick and choose, we don't need to have our allegiances tied to any political unit. While policies are introduced by politicians, their intricacies are planned & executed by bureaucrats. Thus, there’s always a chance that the same government has a policy that you like and a policy which you dislike.
For instance, let’s consider two radical economic policies which, in the author's opinion, had polar opposite impacts:
1. GST
Per the author, a much-needed reform, GST simplified the complicated tax regime in the country. While it could’ve been implemented better, it certainly was a law that transformed the taxation paradigm in our country and was a monumental example of Cooperative Federalism.
2. Demonetisation
Per the author, demonetisation was quite a poorly thought decision. Going against advice from most corners, the Prime Minister backed himself to pull off a supposed Anti-Corruption drive.
While the intention was to reduce the circulation of black money, what really happened was that more than 99.3% of the currency in circulation was received back by the government, reducing liquidity or spending capacity for citizens. In hindsight, demonetisation also horribly affected India’s economic growth trajectory and caused unjustifiable suffering to the masses.
Changing the discourse
Now if you observe, this is the same train of thought that’s objectively liking and disliking policies by the same government. It’s possible!
And this brings me to my focal point. No government is good or bad in totality, it is a combination of multiple good and bad policies. Eventually, it all boils down to which one (the good or the bad) dominates the other!
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