by Welcome back to Traders Ideology, In this article, we’re going to discuss the Top 5 Smallcase Investments under 5000. If we have an option to directly invest in the stocks and if we can invest indirectly in mutual funds and ETFs then what is the need for a smallcase?
It is also a stock market-related product where we invest indirectly in the stocks. Here also, you don’t need to put a lot of time, research, and analysis. Then what is the advantage of smallcase and why is it so popular? We’ll definitely discuss this in this article.
Along with this, how to start in smallcase, means Many people have this concern that they don’t want to put more money in the starting and just want to try. That’s why we bought the top 5 such small cases where you can start with less than Rs. 5,000.
This article is going to be interesting. You’ll learn many new things so read the whole article.
I am assuming that you might know something about smallcase. You might have watched some videos already or read blogs of others related to small cases. But if you don’t have any idea about it, then let me know in the comment section. We can also write a detailed article about it.
What is a smallcase?
A small case is a middle path between the stock market and mutual funds, so if we directly invest in the stocks, we need expertise and knowledge. We need to put time into that and we should have an understanding of finance. But everyone cannot do this or doesn’t have this much time, so we have the Mutual Funds option.
In this, we give money to a fund manager, and they have a whole team. They do the whole analysis, and stock research and then invest in it. But since they’re maintaining a whole team, they have their expenses, and those expenses will be deducted from our returns.
How much is this costing?
We can easily assume 2-2.5% annual charges and many mutual funds even consist of Exit Load which means some charges are deducted while selling. so we have a middle option that is smallcase where it’s not needed to track the market regularly and there are no mutual funds expenses also.
That means if someone made a portfolio after applying some good strategies then we can directly copy their strategies with a click of a button, we can also buy those shares in that portion.
These are the 2 big advantages of smallcase we don’t need to pay for the expenses like in mutual funds and on the other side, control is in our hands just like in the stock market.
So we can buy/sell these portfolios of stocks whenever we want
So we discussed the advantages of smallcase, now let’s discuss
How to Start Smallcase Investment?
A Demat account is not necessary when we invest in mutual funds, but it is a must if we invest in stocks. Hence, a Demat account is a must in smallcase as well because even if you’re copying anyone’s strategy, those stocks will be transferred to an account, and that will be a Demat account.
That’s why, if you don’t have a Demat account, then I would recommend you to open one.
Open an account with a discount broker. There are Zerodha, Upstox, and Angel broking and all of these are good discount brokers where that charge 0 brokerages on investing in stocks.
I am assuming that you have a Demat account. After that, download the Smallcase app. It is available on ios as well as on android. Firstly, you’ll get the ‘login now’ option.
Then you’ll see all the brokers with whom they have tie-ups For example, I have an account on Zerodha, so let me log in with that I logged in and clicked on ‘continue’.
You’ll be logged in here as shown in the above figure when you’ll enter the id and password of your Demat account. Let me type my Id, password, and PIN so that the smallcase app will open up.
Top 5 Smallcase Investments
Let’s discuss the top 5 smallcase investments where we can start with less amount also, i.e with less than Rs.5,000 are as follows:
1. ‘Top 100 Stocks’
Let’s talk discuss the first smallcase that is ‘Top 100 Stocks’
If we look at the overview of the Top 100 stocks, it’s very simple. They invest in the top 100 companies of NIFTY on the basis of market cap and how is its performance. Whenever we’re checking out a smallcase, we can compare its performance with SENSEX or NIFTY, which means where the overall index or market is heading.
The smallcase should at least beat that index or market, then only we should invest in that So as we can see if we compare it with equity large-cap. So it is beating this. This small case was launched in January 2019 and you can see the returns after that as you can see this smallcase is beating the yellow colored line which is the NIFTY50 index.
It is very simple to invest in this, you can simply click on the ‘Invest Now button So their strategies will get copied. We can also check where it invests. So as we can see, the investment amount is very less and the minimum amount is Rs.915 only.
Where it invests
- They are mainly investing in ETFs (Exchange Traded Funds). Where the expense ratio is very less in comparison with mutual funds.
- It is investing 41.73% in Nippon India Junior Bees ETF, and 58% in Nifty 50 Bees ETF which means it is investing 58% in the top Nifty 50 companies.
What is Junior Bees?
It is investing in the junior index of Nifty 50 which means, they are investing 41% in the Next 50 companies in Nifty. Basically, these ETFs will come into your account if you invest in them and as we can see, the 2 years CAGR (Compounded Annual Growth Rate).
That means its annual returns are around 18%. It is a great return and as we saw it is beating the Sensex and Nifty.
2. ‘Equity and Debt’ smallcase
If you don’t want to put all the money in equity or stocks. There are many mutual funds that are hybrid mutual funds. They invest some money in equity and some in debt.
What are debts?
These are the Bonds, which may be public sector enterprises bonds, government bonds, or corporate bonds.
How it invests and let’s compare its returns
If we compare its returns with equity large-cap, it is beating it. This smallcase was launched in February 2021. But if we backtest it and see its previous returns, then you can see That the blue line is always beating the yellow line in the above figure.
This means it is beating the Nifty 50 and we can also compare the returns with equity, FD, and inflation. The average returns given by this smallcase are 11.92% Returns in the case of Nifty were 10%, 7.5% in the case of FD, and inflation was 6.77%. So this is also beating Sensex and Nifty. It is showing only 5 months’ returns because it was launched recently and the minimum investment amount is Rs. 2,819 which is very less.
Why is this investment amount less?
Because generally, the investments in ETFs and Mutual Funds start with just Rs. 500.
That’s why the minimum investment amount becomes less. But generally, the stock portfolio small cases have a higher minimum investment amount. The starting is generally with Rs. 10-15 thousand. But if you want to test out the product then you can do it, and if you want to invest in small cases. So this is one strategy in which we’re investing in equity and debt together.
3. Equity and Gold Smallcase
where we can do the combination of equity and gold. Why does anyone want to combine gold?
When the stock market falls badly due to some reason like it did last year because of the Corona Virus and the markets bottomed out till the end of march, i.e fell badly.
At that time you might have seen that gold had a fast upside rally so whenever the stock market crashes as this occurs, gold works as a hedge at that time. That means our risk decreases and the portfolio balances out. The portfolio will not crash because of less exposure to equity.
What are these weights?
They are investing 30% in gold through Nippon India Gold Bees ETF and the weightage in Nifty 50 Bees ETF is around 70% which means this money will be invested in the top companies of Nifty 50.
If we look at the returns and compare them then you can see here it is given with backtesting. They beat Nifty 50 completely in the past as well. However, it was launched in 2019 and if you want to invest in this small case then the minimum investment amount is Rs.253. This means you can start with a very less investment amount.
4. ALL Weather Investing
All weather investing means it will protect you from big shocks. Even if the market fell badly, it will save you from deep shocks. That means it will invest your money in stocks, and debt, i.e bonds, and gold.
We’ll see the weights but before that, let’s see how it beat Sensex and Nifty As you can see it was launched in 2018. But if we backtest it, it had beat Sensex and Nifty. If we look at the average returns, then the average returns for 3 years are 13.17%, i.e 13% returns annually.
If we see the ETFs and their weights. It is investing 30% in gold. It is investing 46% in equity in which there’s a further breakup. It is investing 27% in the Junior Nifty and 19.5% in the Nifty 50, and it is investing 23.6% in debt ETFs.
Investing in this smallcase becomes a shock-proof investment some people may be interested in investing in global opportunities. There are many USA-based tech companies in which you can invest and there is a way to invest in them.
5. Global Opportunities small case.
Firstly, let’s look at their returns in comparison with Sensex and Nifty as you can see in the backtesting, they’ve beaten Sensex and Nifty in the last 10 years. It is also a new product which was launched in 2021, so the history is of last 5 months It gave returns of around 9% in the last 5 months.
The investment amount is Rs.1611, which is very less. If we talk about ETFs and weights, 25% is invested in Junior Bees. 25% in Nifty 50 which means, 50% of the money is invested in domestic, i.e Indian markets, and Nasdaq 100 ETF, which is the USA’s stock exchange where mostly the tech companies are listed.
They’re investing in the top 100 companies there whose weightage is around 50% because of that, the portfolio balances out. We get 50% exposure to the Indian market and 50% of USA-based high-growth tech companies.
These were the top 5 small cases under Rs.5,000. Where you might have noticed that our money is invested through Exchange Traded Funds and the minimum investment amount is very less here and that’s why the minimum investment of small cases also becomes very less.
When we invest in small cases of stocks, the minimum investment amount may be higher because there may be any stock whose value is Rs. 2,000-3,000 or more and if 10 such stocks are bought, the minimum investment becomes obviously higher.
However, all the small cases are operated in the same way. If you want me to write an article on stock-related small cases, then do let me know in the comments and if you want a complete tutorial on smallcase, then do let me know that as well.
I hope you like the Top 5 Smallcase Investments under 5000 let me know your response in the comment section. We’ll meet in another informative. Till then keep learning, keep earning, and stay happy as always.
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