Smallcase vs Mutual Fund

New investing opportunities are becoming accessible as the times change. Smallcase is another excellent possibility. A smallcase is a collection of equities that invest in a single concept, theme, or industry. They may sound similar to mutual funds, but they are not the same. This blog explores smallcases, Mutual Fund, how they work, and Smallcase vs Mutual Fund.

What are Smallcases?

Smallcases are a collection of securities based on a single strategy, theme, sector, or idea. Smallcases are created and managed by SEBI registered professionals.

A smallcase is made up of up to 50 stocks that have been carefully chosen to reflect a specific strategy. Smallcases are based on a popular market theme, a financial strategy like zero debt, or risk profiles like aggressive, conservative, or balanced.


x is bullish on the pharmaceutical industry and intends to invest in it. x prefers to invest in a variety of firms rather than a single investment.

A Pharma Tracker Smallcase is a solution to a pharmaceutical mutual fund. This Smallcase contains nine pharmaceutical items.

The Pharma smallcase is a company that invests in the pharmaceutical industry. As a result, X can diversify her portfolio by investing in this smallcase. Likewise, different smallcases represent varied concepts, approaches, and concepts.

How do Smallcases operate?

A smallcase is a collection of stocks focused on a single theme, industry, or concept. It was first launched in 2015 by Smallcase, a fintech start-up.

The concept of a Smallcase is to provide investors with direct access to ready-made portfolios rather than through mutual funds. The firm has a lot of smallcases.

Other brokers, though, took up the concept and partnered with the company to offer their own smallcases. SEBI-licensed brokers, consultants, and analysts use mathematics and statistical models to construct a smallcase.

Stocks are inspected and chosen after significant study and evaluation. Investors can participate in all of the smallcase’s equities. Investors can sell smallcases at any time because there is no lock-in period.

How to Invest in Smallcases?

A demat and trading account are required to invest in a smallcase. Furthermore, one can invest in a bulk sum or in a methodical manner. The smallcase’s minimum investment varies depending on the equities in the portfolio.

Brokerage and transaction fees apply because investing in a smallcase is comparable to trading. In addition, a minimal registration fee of INR 100-150 must be paid.

They can, however, adjust the portfolio by including and removing a few stocks. They can also alter the weightings assigned to each stock.

The money is debited from the investors’ trading account when they invest in a smallcase, and the stocks are given to their demat account the next day.

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What are Mutual Funds?

A mutual fund is a form of financial vehicle that invests in securities such as stocks, bonds, money market instruments, and other assets by pooling money from multiple investors. Investment professionals handle mutual funds, allocating assets and attempting to generate capital gains or income for the fund’s investors. The portfolio of a mutual fund is built and managed to meet the investment goals indicated in the prospectus.

They provide small and individual investors with access to skillfully maintained equities, bonds, and other securities portfolios. As a result, each stakeholder shares in the fund’s gains and losses proportionally. Mutual funds invest in a wide range of securities, and their performance is typically measured by the change in the fund’s market capitalization.

How Mutual Funds Operate?

A mutual fund allows participants to pool their money in order to achieve a shared financial goal. The money is subsequently invested in various asset classes based on the scheme’s goals.

You invest your money in monetary instruments such as stocks, bonds, and other securities as an investor. You can acquire them directly or through financial vehicles such as mutual funds.

Direct investing offers several advantages that mutual funds do not. For example, perhaps you lack the ability to analyse market trends or simply do not have the time to do so.

In this instance, mutual funds are a wonderful option because they are professionally managed.

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Smallcase vs Mutual Fund

Here are the differences between smallcase and mutual fund to understand mutual funds vs smallcase.

1. Command over portfolio of investments

Since the stocks are held in the investor’s Demat Account, smallcase investing allows for greater investment control. Having the stocks in a demat account allows the client to time their withdrawal and know where their money is at all times.

Mutual funds, on the other side, do not provide the investor choice over their investment portfolio. You can choose between equity and debt, as well as any subject or sector.

The investor does not have authority over where his or her money is placed in a mutual fund. This is the major difference between smallcase and mutual fund.

2. Diversification

Smallcases invest in a group of securities that adhere to a specific strategy, topic, or concept. As a result, diversification is limited.

Smallcase investments are great for investors looking to make a quick profit in a specific area, or who wish to receive a large dividend or have a rapid growth rate. As a result, these are appropriate for aggressive investors.

Mutual funds, on the other side, provide good diversification for a small investment. Based on its investing aim, a mutual fund can engage in more than 100 firms.

As a result, it provides good diversity, which can serve as a hedge against market falls or situations with significant volatility.

3. Required Funds

In contrast to mutual funds, Smallcase demands a larger investment size. To build a portfolio, one must purchase each unit, which is similar to investing directly in shares.

As a result, it necessitates more capital. Some smallcases invest their money in ETFs with a starting investment of INR 5,000. This, however, is analogous to mutual fund investing. In addition, the minimum investment might be as high as INR 90,000.

Mutual funds, on the other side, cater to a wide range of investors. The minimum lump sum investment is INR 5,000, while the minimum monthly investment is INR 500 for a Systematic Investment Plan (SIP). As a consequence, small investors can profit from portfolio diversification as well.

4. Expense Ratio

The expense ratio is a fee charged by the investing houses. A smallcase’s expense ratio operates in a somewhat different method. Some smallcases are free to the public, while others require a membership.

Some examples are generated by internal teams, while others are created by outside analytic firms. As a result, the fees vary correspondingly. The costs are not included in the investment amount.

Furthermore, the fees are only charged if you use a discount broker. Mutual funds, on the other side, have a low expense ratio. The expenditure ratio, on the other hand, differs between mutual funds.

Approximately 1-2 percent of the investment amount is spent on fees. The expense ratio is not paid separately with mutual funds.

5. Exit Load & Lock-in Period

There are no extra exit load charges or a lock-in period with Smallcase investments. Exit load charges, on the other side, are a feature of mutual funds.

If an owner sells their investment before the lock-in time, a fund can levy an exit load of up to 2%. A mutual fund’s minimum investment period might range from one to five years.

This will also help you to understand the difference between smallcase and mutual fund.

6. Holding Pattern

Holding Pattern plays important role in Smallcase vs Mutual Fund. Smallcase investments allow you complete control over your assets. The investor’s assets are held in a demat account, and dividends are paid to a bank account.

In addition, if a specific stock isn’t operating well, the investor can sell those units and keep the rest of the smallcase. Investing in mutual funds, on the other side, allots the investor units of the fund rather than the individual equities in which it invests.

As a consequence, the investor is unable to make changes to their portfolio. In addition, the returns are determined by the valuation of the mutual fund units.

7. Return

The returns are determined by the performance of the market. Furthermore, based on historical performance, one cannot be certain of future returns. The majority of investors who choose smallcases as an investing choice are willing to accept market volatility & risk.

In furthermore, investors have an added obligation to control risk by continually monitoring market movements & the equities in their smallcase.

Mutual funds, on the other side, provide consistent returns of 8% to 12%. Investors do not need to be concerned about keeping track of market & stock changes.

Historically, mutual funds have risen in lockstep with the economy. Moreover, fund managers adjust their holdings in response to changing market conditions. To control market collapse, MFs are also hedged with derivatives & gold.

8. Risk

Risk is also a major factor in smallcase vs mutual fund. In contrast to mutual funds, smallcase investments carry a substantially higher risk. Smallcases are not well-diversified, and there are no hedging procedures in place.

Mutual funds, on the other side, are managed by professionals who keep a close eye on the market and alter their holdings appropriately.

Additionally, mutual fund investments are vulnerable to market risks. As a result, they cannot assure investors of a profit.

9. Cut off Timing

Investors might take advantage of drops in the market with smallcase investments. In mutual funds, trading occurs before the fund’s cut-off time, and units are calculated using the NAV released after the market closes.

In addition, when dividends are declared, a mutual fund usually reinvests them. Smallcase investors, on the other hand, can better manage and time the market to generate higher returns. This will also help you to understand Smallcase vs mutual funds.

10. Taxation Advantages

This is also considered as a major difference between smallcase and mutual fund. Equity mutual funds and smallcases are both taxed the same way. Short-term capital gains (STCG) are taxed at a rate of 15% on gains made on investments held for less than a year.

Long Term Capital Gains over INR 1,00,000 are charged at 10% for transactions with a holding period of more than one year. Furthermore, there are no tax advantages to smallcase investments.

Whereas investments in an Equity Linked Savings Scheme (ELSS) are tax-free under Section 80C of the Income Tax Act of 1961. This exemption applies to investments of up to INR 1,50,000 each financial year.

Smallcase vs mutual funds Which is Better?

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Mutual funds & smallcases have a similar philosophy. Both invest in a portfolio of stocks in order to build wealth for their clients. They do operate in different ways.

Mutual funds offer greater charges, longer lock-in periods, less transparency & less influence over the portfolio for investors.

Smallcases, on the other side, have lower costs, no lock-in periods, & more transparency, as well as better portfolio discretion for investors.

Investing in smallcases, on the other hand, necessitates market expertise & comprehension. Investors must also select their own smallcases based on their ambitions and objectives.

The investors must decide on the time of entry and exit. Investors in mutual funds, on the other hand, are not required to have any prior understanding of the market.


The portfolio will be managed by the fund managers, who will also timing their entry and exit from the market. All investors have to do is pick a mutual fund that matches their objectives and risk profile.

Though smallcases appear to be more cost-effective in terms of returns, they require market awareness. Smallcases are also an option for investors who have the necessary knowledge to run their own portfolio. Otherwise, mutual funds are a better option.

This is all from our side regarding Smallcase vs Mutual Fund. Please share your thoughts about smallcase vs mutual funds in the comment section.

Frequently Asked Questions about small case vs mutual fund

Why smallcase is better than mutual funds?

Smallcases only charges a small fee (0.2 percent) when the transaction is completed. As a result, smallcase investments have no hidden charges and are a far cheaper alternative to mutual funds. At a predetermined time, mutual funds reveal the stocks in their portfolio.

Which is best smallcase or mutual fund?

Smaller investors should choose mutual funds. Smallcase investors have control over their investments because their shareholdings are represented in their demat account. As a result, they have a greater understanding of their investments and have more control over their exit plan. Exit load and lock-in period: Smallcases have no exit load or lock-in duration.

Is smallcase investment good?

smallcase is among the best-performing and longest-running momentum portfolios on the platform. It has also done quite well since its inception over three years ago, and in 2020 and 2021, it was among the most famous and best-performing investments.

Is small case is a mutual fund?

Although smallcase portfolios are developed by experts, many investors see similarities among smallcase and mutual funds. They are not, nevertheless, the same. To invest in smallcase, you'll require a trading and demat account. Investing in mutual funds, on the other hand, does not necessitate the creation of a demat account.

Is smallcase SEBI registered?

SEBI-registered firms such as brokers, investment advisors, and research analysts establish smallcases. The Firm gives technology solutions and linked closely end infrastructure to SEBI licenced intermediaries and other 3rd parties for the purpose of enabling smallcase transactions via an online world.

Profit Must is being built by a passionate team with in-depth understanding of the IPO sector and stock market. The team does their own research and publishes articles on based on their findings.

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