Mutual funds and Smallcases are one of the popular investment options.
They may seem similar to each other, but they are not.
In this thread🧵, we are going to find out what makes them different.
They may seem similar to each other, but they are not.
In this thread🧵, we are going to find out what makes them different.
What is a mutual fund?
A mutual fund is a pool of money that invests in various stocks, debt and other instruments as per the schemes objective.
A mutual fund is a pool of money that invests in various stocks, debt and other instruments as per the schemes objective.
What is a Smallcase?
A smallcase is a mix of stocks or ETFs that are clubbed together to track a theme, strategy or achieve an investment objective.
We can see that mutual fund and Smallcase are very much similar.
Let’s check out the differences.
A smallcase is a mix of stocks or ETFs that are clubbed together to track a theme, strategy or achieve an investment objective.
We can see that mutual fund and Smallcase are very much similar.
Let’s check out the differences.
1. Investment decisions
When you invest in Smallcase, you own the shares and know where your money is invested.
However, in the case of mutual funds, you may decide the type of fund.
Still, you may not have any direct influence over your investment.
When you invest in Smallcase, you own the shares and know where your money is invested.
However, in the case of mutual funds, you may decide the type of fund.
Still, you may not have any direct influence over your investment.
2. Diversification
A diverse portfolio protects u from stock market crashes.
Even if u have a small investment corpus, a mutual fund is an excellent way to hv a diversified portfolio.
However, Smallcases consist of fewer stocks than mutual funds making them less diversified.
A diverse portfolio protects u from stock market crashes.
Even if u have a small investment corpus, a mutual fund is an excellent way to hv a diversified portfolio.
However, Smallcases consist of fewer stocks than mutual funds making them less diversified.
3. Sectoral allocation
In the case of Smallcase, most of the cases are sector-based.
Concentration in a particular sector makes investment highly risky.
So, diversified mutual funds may be less risky than Smallcase.
In the case of Smallcase, most of the cases are sector-based.
Concentration in a particular sector makes investment highly risky.
So, diversified mutual funds may be less risky than Smallcase.
4. Minimum investment amount
To invest in a Smallcase, you may have to invest a higher amount.
It is because you have to buy at least a single share of every stock.
Mutual funds are affordable. You can start a lumpsum investment at Rs.5,000 and SIP at Rs.500.
To invest in a Smallcase, you may have to invest a higher amount.
It is because you have to buy at least a single share of every stock.
Mutual funds are affordable. You can start a lumpsum investment at Rs.5,000 and SIP at Rs.500.
5. Ownership pattern
Investing in Smallcase gives you direct ownership in the stocks.
That means you get stocks of the company.
However, in mutual funds, you don’t get personal ownership in any of the companies, and fund houses allocate units of the fund.
Investing in Smallcase gives you direct ownership in the stocks.
That means you get stocks of the company.
However, in mutual funds, you don’t get personal ownership in any of the companies, and fund houses allocate units of the fund.
6. Transparency
You can know your mutual fund’s portfolio when they disclose it periodically.
But, if you invest in a Smallcase, you can view and manage your investments without any delay.
You can know your mutual fund’s portfolio when they disclose it periodically.
But, if you invest in a Smallcase, you can view and manage your investments without any delay.
7. Dividend Income
Mutual funds investments are not suited for dividend income as the dividend distributed may form a part of your investment.
But, as you invest directly in stocks through Smallcase, the dividends are credited to your savings account.
Mutual funds investments are not suited for dividend income as the dividend distributed may form a part of your investment.
But, as you invest directly in stocks through Smallcase, the dividends are credited to your savings account.
In this thread, we have seen the 7 differences between Smallcase and Mutual Funds.
We hope that this would help you to pick the right choice for your investment goal.
We hope that this would help you to pick the right choice for your investment goal.
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Thanks for reading😀
Thanks for reading😀
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