Musings with Analyst | July, 2023

All About Cost Calculator

Across the past few live YouTube AMA sessions we have conducted, a common question that has appeared is – ‘How to calculate my actual returns after paying manager subscription fee and any platform fee?’ 

Well, the smallcase ecosystem has made it extremely simple for the investors to calculate their actual returns net of fees. By the help of the Cost Calculator. 

With the help of the cost calculator, you can check-

• Annualized cost-adjusted returns of a smallcase
• Total investment you would require (including subscription fees & transaction charges)
• Overall costs and different components of the transaction charges
• Slippage incurred as per the rebalance timing selected.

You can access the cost calculator tool directly from any smallcase profile. Click on the Understand smallcase costs and returns option below the performance graph as shown below –

Once you click, you’ll be able to see the annualized cost-adjusted returns that would have been generated over a period of time as selected by you. The total investment is the sum of smallcase investment, subscription fee & transaction charges.

All transaction fees depend on your broker and, thus, the charges will be different across different brokers. Note that we ONLY include live data to show the cost-adjusted returns of a smallcase. To get further details about the breakdown of charges, just click on the info icon in front of Transaction Charges.

Transaction charges are dependent on the brokerage plan you are on, so you can experiment with editing the brokerage and investment amount to view data for multiple scenarios with ease. To edit these values and see performance for various scenarios, hit the Edit button and find the screen below –

A vital characteristic of a smallcase is the periodical review wherein the manager decides which stocks to drop or continue within a smallcase to remain relevant to the original idea. When a smallcase manager issues a rebalance update after reviewing the smallcase in contention, you receive the same the following day, before the markets open. You can choose to act on this update and apply it at any time after, as per your convenience. 

Simply pick between these two rebalance options in the Edit section to understand the same –

• Market Close – Here, the cost-adjusted returns of a smallcase is calculated assuming that the rebalance was applied at the time of closing of markets on the day when the update was received. So if the manager pushed the update on Wednesday, this option assumes the rebalance execution was done on Thursday closing time.

• Next-Day Market Close – Here, the cost-adjusted returns of a smallcase is calculated assuming that the rebalance was applied at the time of closing of markets on the day after the update was received. So, if the manager pushes a rebalance update on Wednesday, this option assumes the rebalance execution by the user on Friday closing time.

Calculating costs and returns before making an investment decision is considered good practice. Not only does the cost calculator give you a more realistic picture of the cost adjusted returns of a smallcase, but it also helps you compare two smallcases. It gives you increased flexibility to change investment amounts, edit the brokerage charged, and define the rebalance execution timings.  

The cost calculator greatly increases the transparency in terms of the cost visibility of any smallcase you’re considering for your next investment. It is now easy to understand charges, making your overall investing experience better.

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The content in these posts/articles is for informational and educational purposes only and should not be construed as professional financial advice and nor to be construed as an offer to buy/sell or the solicitation of an offer to buy/sell any security or financial products. Users must make their own investment decisions based on their specific investment objective and financial position and use such independent advisors as they believe necessary. Refer to our disclosures page, here.

Windmill Capital Private Limited – Research Analyst - SEBI reg. no: INH200007645; Compliance Officer – Ajoy Bharadwaj, Phone Number – 8296014433; Email Id - compliance@windmill.capital; Support email id - notifications@windmill.capital