Some observations on smallcases
The smallcases entice many investors due to ease of investment, delight factor, and continuous monitoring. However, it may not be suitable to many investors if used incorrectly. And in many cases, there is mis-selling too. The following considerations are important while subscribing to any smallcase: Subscription fee : Currently, most of the smallcases offer subscriptions on a fixed-cost basis that ranges between ₹3000 to ₹18000 annually charged monthly or quarterly. Let us assume that your investment capital is ₹50000, and you have subscribed to a smallcase charging ₹12000 pa. This amounts to a humongous expense ratio of 24%. Typically a mutual fund has an expense ratio of 0.5-1.5%. It also means that the smallcase has to provide a 24% CAGR to break even, which is quite difficult. Therefore, the takeaway is that unless your capital is large, subscribing to smallcases doesn’t make sense . If a typical smallcase charges ₹12000 pa, then a capital of ₹1000000 would result in an expens...