Kotak Securities SmallCase Worth Investing?

Kotak Securities has signed the partnership with Bengaluru-based Smallcase Technologies that would allow the retail investors to invest in the stocks and exchange-traded funds, which are called smallcases. The investors can do so with the trading and demat accounts, they already have.

Seven brokers are offering the platform created by Smallcase Technologies at present, that includes HDFC Securities, Kotak Securities, Edelweiss, 5paisa, Axis Securities and Zerodha. The investors have complete control on the underlying securities as the smallcase is integrated with the trading accounts.

Investment Rationale for Smallcases

On the platform offered by Smallcase Technologies, the investors can choose a theme of their liking. They can see what stocks make up the portfolio and in what proportion, and the investment rationale. Further, the investors can customize the smallcase, which can be done by adding or removing stocks. If the investors want to build a portfolio of companies that will benefit from rural growth and demand, the investors will get tailor made portfolio of around 15 stocks that derive most of the revenues or volumes from the rural. Once the investor has chosen they can buy the portfolio.

Meanwhile, the investor can be given the option “repair” if the orders are not fulfilled due to illiquidity or other reasons, in which the fresh orders are placed for stocks whose orders were unfulfilled. Repairing is needed to make it sure to the investors that the portfolio matches with the original theme.

Additionally, the brokers generally charge a one-time fee of Rs 100 when the investor first time invests in a smallcase. The transaction also includes the usual brokerage charges. However, there will be no additional fees for further orders in the same smallcase, apart from cost for executing the trades. The clients of Kotak Securities can now invest to various portfolios which are professionally researched and the customers will get so at zero expense ratio or management fees.

Smallcase Vs Mutual Fund

By investing in the mutual fund can provide easier access to a well-researched and diversified set of stocks, but this involves very higher cost. The investment in mutual fund  does not allow any control on the portfolio composition. Therefore, investing through smallcase forms a middle route. Furthermore, investing in smallcase is a good option for the investors who wish to participate in themes or ideas that not available in mutual funds, like GST Opportunities, Smart Cities and Affordable Housing.

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Overall, the investors have got another option to access well researched stocks.