100 to almost 1 lakh in 12 years
1700 to 1 lakh in 4 years
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Looking at the Selection Criteria, the index has nothing todo with actually applying in the IPO or listing gains. This index can be recreated rather easily by any mutual fund or ETF.
You could technically just buy all these shares and follow any new IPOs to recreate this on your own or a smallcase might could be made but the problem is this index has a large number of constituents (71 at the moment). The total value of shares in this index is 13650.89 at the moment. Not too bad, right? But don’t forget that there are SMEs and trade in lots of 1 lakh rs, so you would need a minimum of ~71 Lakhs to recreate this at the moment. Potentially require more capital if more new IPOs come faster than the current constituents aging out.
Edelweiss Recently Listed IPO is using S&P BSE IPO Index as benchmark not S&P BSE SME IPO Index. Their product is lower risk but lower reward too!
Followup. It might be possible to do this with NSE SME IPOs since they have smaller Lots. Also NSE seems to not do as many IPOs. You could definitely track that with a smallcase and ~1lakh rs in capital.
NSE also has large lot sizes for SMEs. You would run into the same problem of requiring a few lakhs in capital.
There is also: NSE SME EMERGE Index which is all the SME stocks on NSE!
My guess as to why SEBI doesn’t allow any ETF or Mutual fund to track this index is that it would make too much capital flow into these stocks making their value go up. Retailers like us don’t have to worry about our orders influencing the market but a mutual fund with such insane returns can definitely create a bubble here.
PS, if this kind of risky investing is your thing, look at Motilal Oswal Nifty Microcap 250 Index Fund. It also gives this kind of crazy multi bagger returns but with very high risk.
Smallcase doesn’t allow adding SME stocks to your own smallcases unfortunately
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I’m inexperienced in small case but I’m wondering if the small case could find better stocks / funds during bull markets right now ? I mean will it still suggest mid, small cap stocks which are already at premium levels?
Do you know any which are not? 