Is Smallcase Rebalance burning a hole in your pocket?

Also, the CAGR mentioned in small case is backtested one. The actual CAGR will be way less. I am only seeing this today. Lets take, https://smallcase.zerodha.com/smallcase/SCNM_0026. The returns are -ve. But the CAGR shown is mind blowing 25%. @Anugrah small case should show what they delivered. There is no option like “Since launch” to track their performance. Fraud, should be reported to SEBI.

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IS it good to invest in smallcase?

Which criteria you use for your overbought and oversold zones .
It that indicator (RSI ) or something else

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No ways

Very good post and debate…

As mutual funds returns are inclusive of all rebalances., meaning fund manager takes care of it

Can someone enlighten on MF vs Smallcase returns post rebalances, trading charges ?? @rupeshmandal @Anugrah

To me in layman’s language, MF is like Khichdi prasad made in the langar or temple where thousands contribute funds, where the ingredients for the proportion of 1000 people are bought and cooked together by the langar/ temple committee members (fund managers). Say carrots for 1000 people are cooked together so the khichdi retains the nutrition value of 1000 carrots. Once cooked, the khichdi prasad is served to all as per the contribution they made.

Whereas,

Smallcase, is like the ingredients and recipe is told to you every 3 months and you have to cook for yourself. You could be a good chef or you could be a bad one. You may choose to alter the propositions of ingredients and also duration to cook. Also, like you, thousands are cooking at their respective homes. With their ratio and proportions of ingredients and cooking method. At each one’s home gas is being utilized. So if 1000 people are cooking individually, 1000 times gas is consumed separately. So more gas is consumed compared to the langar/ temple. While each one has added ingredients say carrots for 1 person consumption. So that much nutrition only it can retain in the khichdi. Also, some may cook a little less, some may overcook it. So whatever you cook, you eat without complain.

To me, the khichdi prasad at temple/ langar tastes better and is more nutritious.

So I have exited from all smallcase last year because of the above difference, and basis my preferences. I have kept only an All-weather smallcase there too I have changed the ingredients - sold all liquidbees, because I didn’t like that ingredient.

I have kept this one smallcase only because @Anugrah had invested a lot of time and energy in clarifing my doubts and I consider him a friend despite our differences in the product. Also, this way I keep a watch on how smallcase is evolving, and time and again share some feedbacks with him to make it better.

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Also i believe the returns they show on smallcase is incorrect as those doesn’t include rebalancing cost and STCG tax…

There are also NO risk metrics such as standard deviation, beta, sharpe ratio…

Probably all these are going unnoticed as this is new product, hence no accountability from smallcase

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@rupeshmandal, Hello Sir, gone through all your comments and views above… Tks a lot for being open and explaining in detail… I’m a newbie, I was thinking Smallcase is replacement of MF, may people put such videos in YouTube,…you really opened my eyes and saved my money…I created my account in this blog just a put this msg and thank you… tks a lot once again for bringing out the internal points/pains/issues which people generally realise after some point of time and after loosing some money…Tks

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Very interesting discussion… My personal opinion after reading all this is if things like brokerage fees, transaction charges, STCG etc bothers one too much then one is missing the bigger overall picture of Equity Investing…

The potential of great returns is what you incur all these charges for (based on someone else’s advice be it in MF or Smallcase or PMS or Telegram tips etc. :wink: )

In the long run, these costs don’t really matter if luck is with you… and if you have bad luck even a Debt fund can give you sleepless nights, Franklingly speaking :stuck_out_tongue:

Stay positive and happy investing :slight_smile: :+1:

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Hi,
I am facing rebalance issue. Not able to do. Any further update on this subject. i sent my complaint in in March 18 -2021. Every email they say we working on it to solve .I am worried about my investment. If any one has solution , please let me know.

If you are not able to rebalance through smallcase website or app, you can note down the underlying buy and sell in the rebalance and execute it manually on Kite. And then tell smallcase team to refresh it.

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Thanks for reply. Any charges i have to pay for this ? I am using Upstox ? According to smallcase no charges for rebalance . Sell = buy ?

Hello sir,
As you have just said that currently you are investing in only “All weather Investing Smallcase”, sir i have some questions-

  1. How are you maintaining the re balance of that and how much it charges ?
  2. I am newbie and want to invest in that through SIP of Rupees 1000 or more for long term may be more than 3 years , would it be more costly to me ?
  3. what should be my strategy ?

I don’t follow smallcase rebalance anymore. I have tweaked it to my need like I have removed Liquidbees (because I have a good proportion of fixed-income assets already). Instead of all Goldbees, I have a mix of Gold ETF (short term) and Sovereign Gold Bonds (long term). And I manage it on Kite myself and don’t rebalance it on smallcase anymore. When I had opted in there was an offer so there are no rebalance charges for me.

For you, there might be a monthly rebalance charge on smallcase. Also, there would be tax liability because of rebalance which if you don’t understand completely, might become an expensive affair.

My advice would be you better stick to a combination of Nifty 50 and Nifty Next 50 either through ETF or Index Mutual Fund. And start a SIP and add lump sum at dips. Don’t look at the returns for the short term. Just follow a discipline. When Gold becomes cheaper, add it to your portfolio as in Gold ETF and SGB. Also, one international fund e.g S&P 500. So total 4 components. That’s it. Maintain a healthy asset allocation despite the market conditions and follow the discipline.

P.S.
Start with equity investments only once you have covered your risks - set up an emergency funds backup equivalent of your 6 months salary. So in case you lose your job, you have a buffer to find another.
In current times, health insurance is a must. So make sure you have one to cover any medical expenses. And if you have a dependent family or parents, get term insurance. Only when you have covered your risks first, and you have some fixed-income assets in place like Bank FDs, then only get into stock market.

All the best!

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Thank you so much for the time you have taken out to guide me.
Sir, I am a govt employee(age-26, retirement at 62) and having savings amount of approx 12k/month apart from term insurance health insurance and a monthly SIP of 2k on ppf(Tax benefit), which i have already taken.

I have recently got job and also have prepared my emergency fund of my 3 months salary which i will further increase as my salary increases and same i will do for my savings amount.

Sir, I have planned my savings as per the risk ratios.
For low Risk (For retirement)

  1. Growth MF
  2. Index Funds
  3. Equity large cap MF
    Also the SGB suggestion of yours i have noted down.

Medium risk (for short term needs)

  1. Flexi cap MF
  2. Mid and large cap MF
  3. smallcap MF

High Risk
here i will invest in upcoming months in small cap and mid cap stocks after gaining some experience and understanding of stocks. I am also reading and learning about fundamental and technical analysis by myself and then i will invest.

*Please look what things i should correct in above portfolio provided the risk should be maintained. I have patience and can wait for long term results but i also want some good amount in 2 to 3 years for marriage(in 2022) etc.
Also i have decided to not invest in small case.
Also I am thinking to invest my emergency fund in liquid debt fund. Will that be a good idea ?
Thank you in advance.

Congratulations on your job. And good that you’ve covered your risks with health and term insurance.
Now regarding the investment plan, I think you are spreading too thin with the total amount available per month. Starting at age 26 is an advantage for you. If I were you, I would done the following (I wish someone had guided me when I was 26):-

  1. Nifty 50 (ETF/ Index Fund): 30%
  2. Nifty Next 50 (ETF/ Index Fund): 40%
  3. Sovereign Gold Bond: 10% (buy in staggered manner, not in bulk)
  4. S&P 500 (Index Fund): 20%

Keep it simple. You don’t need anything else. The above allocation takes care of investing in top 100 companies in India. Adding Gold proportion as hedge and S&P 500 for international diversification. With market conditions and age, risk-taking ability, rebalance the above allocation accordingly.

Even for short term needs, invest in select stocks for 1 year at least and then sell them to take advantage of LTCG of 1 Lakh being tax exempted. So it’s like farming. You sow now to reap them after a year to make 1 lakh profits completely tax-free. Now invest the principal in other stocks again for 1 year. This take care of your short term needs. For your retirement, check what NPS provides you. I am not so well versed about the rules of NPS asset allocation for Govt employees. Take an informed decision after studying.

Life is simple. Don’t complicate with too many funds or stocks, this strategy, that strategy, and don’t look at who is doing what.

All the best.

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Please if someone can help me on this below mentioned issue which i am facing right now.
Let me explain the issue
I created one smallcase which consist of same component and weight as NIFTYBANK INDEX.
The total value was coming around 15K.
So, whenever market falls by few % i use to go to “INVEST MORE” tab and invest 15K.
So, In every NIFTYBANK market fall i buy perticular number of shares (for example lets assume 5 Nos of shares)

Now, Recently i added one more stock in my NIFTY BANK small case hence i paid the amount for that particular stock (AU Small Finance Bank at value 930 Rs and this completes my order) - (Now i have 6 nos of shares)

Next, Today morning when i tap on the “INVEST MORE” tab i was expecting the amount of 15K plue 930 rs i.e around 15950 rs BUT to my shock, now its showing the minimum amount for this smallcase is around 56K which is my current portfolio value - this means now i have to buy 5+5+6 = 16 Nos of shares (assuming this is my 4th investment)

This means now if i want to invest i need to buy the same number of shares which i own right now.
Please can anyone help me on this.

Illustration :

  1. Amount 15K - 5 nos of share
  2. Amount 15K - 5 nos of share
  3. Amount 16K - 6 nos of share

Now i am expecting in my next investment i will be buying another 6 nos of shares.
But, my smallcase is suggesting my to buy 5+5+6 = 16 nos of shares for my next investment (hence, now my minimum investment value is NOT 15K but 56K) - Please suggest how to resolve this issue ?

I don’t know enough to help you with this, but your chances of getting help may be better if you post this as a new topic in the forum, with a title that describes your issue better than the title of the current topic.

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Thank you so much sir for the time you have taken out answer.
one last thing- Shall i invest my emergency fund in liquid debt mf or keep in different savings accoun ?

Keep some of it in savings account, and the remaining in FDs which can be instantly broken online. Liquid fund returns are very less nowadays. No point keeping emergency fund in liquid funds now.

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