Would you rather buy smallcase over mutual funds?

Mutual funds on an average give returns of 20-30 %.
Some smallcase are giving returns above 40% and I feel are more transparent compared to Mutual funds in terms of charges.


Stocks in mutual funds are selected by presumably a good research team who need to consistently outperform the market to increase AUM and get more clients. But there are lot of funds which have failed in past and many will underperform market in future. But they still have an elaborate process in stock selection.

Stocks in smallcase are also selected based on some fundamental criteria. But as far as expertise is concerned, it will be considerably less than most popular fund managers in Indian market. You would still need to perform some fundamental analysis yourself before investing.

If you have enough experience and knowledge regarding fundamental analysis and technical analysis, go with smallcase. And yes, the charges are drastically lower than MFs - Flat Rs 100 vs average 2% annual expense ratio.


Basic difference between smallcase and MF is that MF funds are managed actively whereas smallcase is managed passively. Isn’t it?

I definitely will go for smallcase if have to be given only 2 choices. Basic reason could be satisfaction of direct investment in stocks and I think Vasanth and Anugruh really doing a superb job of selecting stocks for the corresponding thematic/concept based smallcases. I see both of them as a future fund manager :slight_smile:.