A demat account allows you to invest in several financial assets and makes the investing process easy and convenient. With financial innovation, new sophisticated financial products and asset allocation structures have come to the fore. One of these financial assets is a smallcase investment.
What is a Smallcase?
A smallcase is a basket of stocks and Exchange Traded Funds (ETFs). Smallcases are considered suitable investments for individuals with a good understanding of the stock market.
Investors can create their own smallcases by putting together a portfolio of stocks and ETFs by themselves or invest in professionally tailored ones created by financial advisors.
Investment experts choose the stocks and ETFs to include in the basket and provide optimum returns. The choice is based on specific themes, investment strategies, or trending ideas. There is no hassle of tracking or trading multiple instruments. You can buy multiple stocks in one click. You can choose to invest regularly with a systematic investment plan (SIP) in a disciplined manner – weekly, monthly, or quarterly.
Demat Account for Smallcase Investment
Like the primary requirements for traditional stock trading, you need a demat, trading, and bank accounts to invest in smallcases. Securities in the basket are stored in the investor’s Demat account to make it highly convenient for investors.
If your broker is one of the firms collaborating with Bengaluru-based smallcase Technologies and offering this platform, you can use your demat account to invest in these products. You can link your existing demat account or open a new demat account to invest in smallcases. It makes smallcase investments a matter of minutes.
- You need to go to the smallcase website or the dedicated smallcase portal of your broker. Log in to the platform using the credentials provided by your stock broker.
- Now you can see options and themes to choose from, for example, all-weather, smart beta, bargain buys, etc. There will be details of stocks forming the portfolio, like their proportion and the motivation for such inclusion. If the broker allows, you can add or remove the stocks from the basket.
- Once you have decided on a smallcase, you will be redirected to the payment gateway. The price and number of individual stocks will decide the amount you need to pay. There is a one-time fee for one smallcase.
- After completing the payment, the stockbroker’s platform will place the buy orders for all the stocks in the basket. The order execution will depend on liquidity at any point in time.
- If there is an illiquidity issue and the order is not fulfilled, you are allowed to go back to repair the order. After repair, a fresh order is placed. It is necessary to repair the order to match the original theme.
Who should consider Smallcase
- Long-term investors who can stay invested for 10+ years can consider smallcase platforms. Theme-based investing needs time to provide compound returns.
- Investors with set financial objectives from their investment portfolio can consider smallcases. Here every asset allocation is structured for certain goals. For example, a basket of dividend-yielding securities for investors looking for a fixed income, commodity ETFs to stay invested in precious metals, or small-cap baskets delivering significant returns.
- If your risk appetite allows and you can take a certain degree of risk, you can delve into these products to earn higher-than-average returns. If you have put aside a corpus after saving funds for necessary and expensive milestones in life, it can be a sweet place for investments.
Thus, if you have a demat account with a supported stockbroker, you can link it to invest on the smallcase platform. If you want you can open a new demat account as the SEBI (Securities Exchange Board of India) allows investors to open multiple demat accounts.
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