Zerodha SmallCase: Review

Zerodha is offering an investment portfolio service named as Smallcase. A smallcase is a predefined portfolio of stocks ranging from 5 to 20 stocks. One can invest from a large variety of themes available under Smallcase. Some examples of smallcase  based themes are

How they are different from Mutual Funds

1. You can exit or enter anytime from the smallcase without any fee apart from a one-time fee.
2. When you buy a Smallcase, all it does is it places a market order for the pre-defined portfolio.
3. Every Smallcase is reviewed quarterly and the portfolio updates are released on their websites. Any users willing to apply update have to go on their website.
4. You have to bear all charges of buying or selling stocks such as STT, Exchange Transaction fee, CDSL/NSDL debit fee. Brokerage is not mentioned as zerodha does not charge for it. 

Types of Smallcases?

Zerodha offers 4 categories of Smallcases.

1. Select Smallcase- Smallcase made by cherry picking the best of the lot. 
2. Thematic Smallcase- Portfolios that reflect the current market theme like the sectors which will get benefited most in present time. 
3. Model Smallcase- Strategies based on dividend/technical/fundamental models
4. Sector Smallcase- Portfolio based on sector-based exposure. 

How to select Smallcase?

As said earlier, one can select any type of Smallcases based on his understanding of the market and economy. Every Smallcase's portfolio is created by keeping some rational in mind. A prospective investor must go through the rational once. All Smallcases are also attached with their past performance but selecting Smallcases solely based on their past performance is not recommended. 

For example, rational of affordable housing is given below.

A beginner should go through thematic based smallcase first. Consider going through popular ones and get an understanding of different flavours available. 

Fee structure of Smallcase

They charge a nominal fee of 100Rs if you purchase any Smallcase.  Recently, They have released some new type of Smallcase which are charged 200 Rs. No additional fee for applying quarterly updated or when you add more investment to the same portfolio.

How to exit from Smallcase?

You can exit from any Smallcase very easily. You need to visit their website and click on exit Smallcase. It will place sell market order for all the stocks under it. 

Partial Exit

Recently they have also introduced partial exit in which some predefined stock could be sold from a Smallcase. The partial exit is not available for all the Smallcases. 

Reinvesting in Smallcase

Once you exit completely from a Smallcase and if you are willing to invest again then you need to pay again their fee i.e. 100 Rs.

Important Point  
You cannot invest in smallcase unless you have a Zerodha trading and demat account. You can easily open a trading account with Zerodha and invest with ease.

My own experience

I have invested in affordable housing smallcase on Feb 2017. Investment returns are good and are nearly five times of bank fixed deposits. One good thing about smallcase is you do not have to worry about your investments. You only have to apply release update by Smallcase's team every quarter.

Here is the snapshot of my smallcase investment.

One advice to beginners, do not buy a lot of Smallcases in order to diversify your portfolio. A smallcase will have minimum 5 stock and max of 20 stocks. Selecting more than 4 smallcase will over diversify your investments and decrease your investment returns.

Choose 1 or 2 which you think are best suited for you as every portfolio has minimum investment amount. In every quarter when they release an update and if they remove any stock from that portfolio you have to pay CDSL/NSDL fee (around Rs 15) on every stock debit.

Smallcase Link

Happy investing.