The biggest difference between smallcase and mutual funds is that smallcases are pre-built portfolios of stocks or exchange-traded funds (ETFs) that can be bought and sold in a single click. While mutual funds are managed by a professional fund manager who invests in a diversified portfolio of stocks and bonds.
This article covers:
- What is smallcase?
- What is mutual fund in simple words
- Difference Between Smallcase And Mutual Fund
- Smallcase Vs Mutual Fund- Quick Summary
- Smallcase Vs Mutual Fund- Frequently Asked Questions
What is Smallcase?
Smallcases are innovative investment products allowing investors to invest in a diversified portfolio of stocks with a specific investment theme or strategy. For example, if you feel optimistic about the green energy sector and think that this sector will grow in the future, you can invest in a Green Energy Smallcase.
Smallcases are created and managed by SEBI-registered professionals. A smallcase generally consists of up to 50 stocks that are carefully picked to reflect a specific investment strategy. They allow investors to easily invest in a portfolio of stocks that reflect their investment beliefs and goals. It is a modern and user-friendly way of investing in the stock market, especially for beginners who may not have the time, knowledge, or resources to build.
What are Mutual Funds in Simple Words?
In simple terms, a mutual fund is a collective investment scheme that allows investors to benefit from the expertise of professional fund managers who manage the fund’s investments. The income or gains generated from these mutual funds are distributed proportionally among the investors after deducting the applicable expenses and fees.
The value of each investor’s holdings is calculated based on the net asset value (NAV) of the mutual fund, which represents the market value of all the securities held by the fund.
Difference Between Smallcase And Mutual Fund
The primary difference between smallcase and mutual funds is that smallcases offer investors control over individual securities, while mutual funds are managed by fund managers who make all investment decisions.
| Feature | Smallcase | Mutual Fund |
| Control | Investors have control over the stocks in the smallcase and can add or remove stocks as they prefer. | Investors have no control over the individual securities in the mutual fund as the fund manager makes all investment decisions. |
| Portfolio Diversification | Smallcases are pre-built portfolios that offer exposure to multiple securities and sectors. | Mutual funds are diversified by design and invest in multiple securities across sectors and asset classes. |
| Capital Requirement | Smallcases have a lower minimum investment requirement, with some smallcases having no minimum investment. | Mutual funds usually have a higher minimum investment requirement. |
| Expense Ratio | Smallcases usually have a lower expense ratio than mutual funds. | Mutual funds have a higher expense ratio due to fund management fees and other expenses. |
| Exit Load | Smallcases do not have an exit load or have a very low exit load. | Mutual funds may have an exit load, which is a fee charged when investors redeem their units. |
| Holding Pattern | Smallcases are held in a demat account, similar to stocks. | Mutual fund units are held in the fund’s account and can be bought and sold on the stock exchange. |
| Return Volatility | Smallcases can have higher return volatility due to the concentrated holdings. | Mutual funds can have lower return volatility due to diversification. |
| Risk | Smallcases can have higher risk due to the concentrated holdings. | Mutual funds can have lower risk due to diversification. |
| Taxation | Smallcases are taxed similar to stocks. | Mutual funds are taxed based on the type of fund and the holding period. |
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Smallcase Vs Mutual Fund- Quick Summary
- Smallcase is a thematic investment platform allowing investors to invest in curated portfolios of stocks or ETFs based on specific themes or strategies, while a mutual fund pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities, highlighting the difference in the investment approach and portfolio customization.
- Smallcase is a portfolio of stocks managed by a professional or created by an individual investor. On the other hand, mutual funds are investment vehicles that pool money from multiple investors to invest in various assets.
- Smallcase allows investors to choose their own holding pattern, while mutual funds have fixed holding periods.
- Smallcases usually have a lower expense ratio and no or low exit load, while mutual funds have a higher expense ratio and may charge an exit load upon redemption.
Smallcase Vs Mutual Fund- FAQs
1. What is the difference between Smallcase and Mutual funds?
Smallcase is an investment platform where users can invest in pre-selected portfolios of stocks. Whereas mutual funds pool money from multiple investors to invest in a diversified portfolio of securities selected by a professional fund manager.
2. How to invest in smallcase?
To invest in a smallcase, you need to follow these simple steps:
- Open a trading account with Alice Blue.
- Log in to your smallcase account via smallcase app.
- Browse through the list of smallcases and choose the one that aligns with your investment goals and risk appetite.
3. Is it worth investing in smallcase?
Smallcase offers a low-cost and efficient way to invest in a diversified portfolio of stocks and ETFs. As per the data released by Smallcase, the top-performing smallcases have generated returns ranging from 30% to 50% over the past year.
4. Is smallcase good for long term?
Smallcase can be a good option for long-term investors who are willing to hold their investments for a period of more than five years.
5. Is smallcase SIP or lumpsum?
Smallcase supports both SIP and lumpsum investments. Investors can choose to invest in smallcases through a lump sum payment or through a systematic investment plan (SIP).
6. Is smallcase SEBI approved?
Yes, smallcase is a SEBI-registered investment advisor and a SEBI-registered portfolio manager. All smallcases are created by SEBI-registered professionals who have passed SEBI’s investment advisor examination.
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