How do SIPs work in a Smallcase?

Before we get into how SIPs function in Smallcases, note that Smallcases are a basket of stocks and ETFs with dynamic price movements. And unlike mutual funds that permit one to buy partial shares, investors need to purchase full units of the stocks. That is if a Smallcase portfolio has stocks of 10 companies with 10 units of shares each (equal-weighted), the investor will need to purchase all the 10 stocks at the price of the day, even though he need not purchase them in the same weightage (no compulsion to buy 100 shares). The minimum investment amount is thus dynamic in nature and updated in real-time, in line with the daily price movement of the underlying assets.

So, the first investment in a Smallcases needs to compulsorily be a lump sum investment that adheres to the minimum investment requirement for most Smallcases. You may thereafter activate a SIP in it for no additional charges. This means that a SIP in Smallcase is possible only in Smallcases that you have purchased and subscribed to.

The first investment amount, called the Minimum First Investment Amount, is the least amount required to invest in all the stocks of the selected smallcase as per the weights.

Once added to your portfolio, you can then proceed to establish a SIP in it. Note here that your SIP amount will be different from your Minimum First Investment Amount.

According to Smallcase, you can start a SIP for an amount less than the minimum investment amount for the smallcase, if the minimum investment amount is more than Rs 10,000.

Of course, the SIP amount is less than or equal to the minimum investment amount in Smallcases where the minimum investment amount is less than Rs 10,000.

The SIP frequency, on the other hand, depends on the Smallcases that you choose. Almost all Smallcases allow monthly SIPs, while some schemes, like Teji Mandi’s Smallcases also allow weekly, quarterly and annual SIPs for easy investments.

Another point of difference with mutual fund SIPs is that when you set up a SIP in Smallcases, you essentially set up only an investment reminder. Your investment is not really automated. You simply get a reminder to invest in the SIP installment. That said, Smallcase facilitates a 2-click process to invest in further SIPs.