What’s the Difference between Smallcase and Mutual Fund?

Smallcase has been a trending topic in the past few years. Let’s discuss in this blog, what smallcase is, the difference between smallcase and mutual fund and which to choose between mutual fund vs smallcase.

Now let us look at the difference between smallcase and mutual fund

What are Mutual Funds?

A Mutual Fund pools money from various investors and puts these funds into different assets such as equity, debt, gold, etc., depending on the specific scheme chosen by the investor. It is professionally managed and monitored by a fund manager whose goal is to generate returns for the investors. 

Example –  Srishti invests in LXME’s Rs. 100 Equity Fund through a SIP of Rs.100/- monthly. This allows her to diversify her money across different companies that the fund invests in with just Rs. 100.

What are the benefits of Mutual Funds?

• Convenience – Mutual funds are a convenient way to invest because women don’t need to time the market, instead money will be subtracted from their bank account at regular intervals and invested in the MF scheme they have chosen. 

• Professional Management – Mutual funds are actively managed by experts who monitor the fund and make important decisions about its performance. In this way, mutual funds are suitable for everyone as they can select a particular scheme as per their goals, risk appetite, etc. 

• Diversification – With mutual funds, you can invest in multiple securities, diversifying across asset classes like equity, debt and gold and therefore ensuring you don’t put all your eggs in one basket!

• Investment amount – You can start investing with as little as Rs. 100!

What is Smallcase?

A smallcase is a basket of stocks related to a specific theme. These portfolios are designed by SEBI registered professionals and are aimed at providing investors with diversified exposure to specific sectors, industries, or investment themes.

What are the benefits of Smallcase?

• Thematic Investing: Smallcase allows investors to invest in curated portfolios of stocks based on specific themes. This thematic approach enables investors to align their investments with trends, sectors, or themes they believe in..

• Diversification: Each smallcase is composed of multiple stocks providing investors with diversification. By investing in a smallcase, investors gain exposure to a variety of stocks within a particular theme. 

• Customization: Investors can choose smallcases that align with their investment goals. Additionally, investors can customize their portfolios by adding or removing individual stocks within a smallcase.

Smallcase vs Mutual Fund

Parameters	Smallcase	Mutual Funds
Meaning	A basket of stocks related to a specific theme.	A pooled sum of money that is expertly put into a portfolio of securities based on the investment objective of MF scheme .
How to Invest	You need to open a demat account.	You don’t need to open a demat a/c. If you invest through LXME, you can get access to expert-curated Mutual Fund Plans!
Risk	Higher risk due to limited diversification and focus on specific sectors/themes.	Lower risk as MFs are professionally managed and fund managers will attempt to keep risk levels within limits set by the investment objective of the specific fund
Asset Classes	You can invest in equity.	You can invest in equity, debt, gold etc.
Price	Its price fluctuates as per the changes in the price of the stock.	It has a Net Asset Value (NAV) that is updated at the end of the day.
Investment Amount	Higher Investment Amount as compared to MFs	Lower Investment amount required, as low as Rs. 100
Taxation	Taxed in the same manner as stocks.	Taxed as per asset composition of MF. Equity, Debt and Gold MFs are all taxed differently.

Which is better: smallcase vs mutual fund for a woman investor

While, both MF and smallcase are investment options through which you can avail the advantages of the stock market, it is important to note the following benefits of mutual funds over smallcase:

Expert Management:

Smallcase portfolios are customizable, investors can add or remove stocks as per their discretion and preference. Investing in smallcase is more suited for professional investors who have the time and knowledge to manage their smallcase portfolio. MFs, on the other hand, are professionally managed by expert fund managers who takes care of the decision of buying/selling securities in the portfolio.

Greater Diversification:

MFs can invest in stocks from different sectors or industries allowing for greater diversification, while in smallcase, although there are multiple stocks, they are all as per a specific sector/theme.

Smaller Investment Amount:

With mutual funds, you can invest with as little as Rs. 100!

To sum up, deciding between MF vs smallcase depends on a woman’s investment and financial goals, her risk and the amount she wants to invest. While the benefits of mutual funds outweigh the benefits of smallcase, a woman’s first step should be identifying her goals and choosing investment options that’ll make her goals a reality. Deciding between smallcase vs mutual fund investment will be easier to make while keeping your goal in mind.

To invest in actively managed MF portfolios, check out LXME an online investment platform where you can find goal and time-based portfolios and start investing today! These portfolios are well-researched and are curated by experts. Begin your journey with just Rs. 100!

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