Windmill’s Guide to Managing Your smallcase Investments Like a Pro

We often get questions from our valued users about managing and maintaining their smallcase portfolios. We understand the importance of effectively nurturing your investments for long-term success. That’s why we’ve crafted a comprehensive guide to address your queries, offering essential strategies and best practices for managing your smallcase portfolio.

Understanding Portfolio Management

At its core, portfolio management is about creating and managing your investment account. It involves making strategic decisions about where to allocate your funds and regularly monitoring and adjusting your investments to stay on track toward your objectives. A solid financial plan can provide clarity and direction, allowing you to focus on your daily life without feeling overwhelmed by your portfolio.

A primer on smallcase as an asset

Long-term Portfolios: At Windmill Capital, we’re committed to crafting long-term portfolios, particularly our smallcases. Our smallcases allow you to passively invest in unique strategies and themes with longer investment horizons. By focusing on the long term and resisting the urge to tinker with your portfolio frequently, you can avoid emotional decision-making and stay committed to your investment strategy.

Taxation of smallcases: For smallcases consisting of stocks, the taxation follows the same guidelines as individual stocks. Short Term Capital Gains (STCG), applicable when stocks are sold within 12 months, are taxed at 15% of the gains, while Long Term Capital Gains (LTCG), for stocks held over 12 months with gains exceeding Rs. 1,00,000, are taxed at 10%. Dividends received from smallcase investments are taxed only in the hands of the recipients at their applicable rate. Read this article by Central Board of Direct Taxes to know more.

Coexistence with Mutual Funds: One of the most frequently asked questions by our users is if smallcases can coexist with mutual funds. Yes! Both smallcases and mutual funds offer distinct features and benefits, making them complementary assets in a well-diversified investment portfolio. Incorporating both allows for greater diversification and control, catering to various investment goals and risk tolerances.

Now, let’s get to the crux of the blog. How to manage your smallcase investments?

Managing your smallcase Investments

1. Diversify:
   • Consider diversifying your portfolio across different asset classes and sectors to spread risk. Diversification is a risk management technique that involves spreading investments across different asset classes and sectors to reduce the impact of any single investment’s performance on the overall portfolio. By diversifying, investors aim to minimize the potential loss from any one investment while maximizing returns from the entire portfolio. Check your Investments Score on the smallcase App. Investment Score is a comprehensive metric that offers valuable insights and actionable to enhance the overall health of your portfolio.
2. Invest Consistently:
   • Enough articles tell you why SIPs are important – and rightly so. SIPs are a powerful tool for building wealth over time. By regularly investing a fixed amount at predefined intervals, such as monthly or quarterly, you can take advantage of rupee cost averaging and compound interest to grow your investments steadily. SIPs on the smallcase platform offer the benefit of automation, allowing you to invest consistently without the need for constant monitoring. Read this blog to understand how smallcase SIPs are different from Mutual Fund SIPs.
3. Review regularly:
   • Rebalancing is a critical component of effective portfolio management. It helps you maintain a balanced and diversified investment portfolio aligned with your long-term financial goals. Rebalancing occurs on two levels: overall investment-based rebalancing and individual portfolio-level rebalancing. The former aids in maintaining the desired asset allocation in your portfolio. The latter involves periodically realigning individual portfolios to ensure they align with your investment objectives and risk tolerance.
     • To ensure that you can apply rebalances to your smallcase, it’s important to maintain an active subscription. If your smallcase subscription is not current, you won’t be able to view the updates or apply rebalance. 
     • If you haven’t already invested in them, it’s a good time to explore as these smallcases are now in mint condition. Read this blog to understand what would happen if you miss a rebalance.
   • Note: Windmill Capital has released an update for all model smallcases and two smart beta smallcases, which include the following smallcases.
     • Growth at a Fair Price
     • Straight Flush
     • Value & Momentum
     • Safe Haven
     • The Naked Trader
     • Growth & Income
     • CANSLIM-esque
     • Dividend Smart Beta
     • Low Risk Smart Beta

End Note

Managing your smallcase investments doesn’t have to be complicated. By staying disciplined with SIPs and adhering to a predetermined rebalancing schedule, you can optimize the performance of your smallcase portfolio. Remember, consistency, discipline, and patience are the keys to building wealth. So keep investing, stay the course, and watch your smallcase portfolio grow.

Happy investing! 

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 (in case of IAs) 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 using such independent advisors as they believe necessary.

Windmill Capital Team: Windmill Capital Private Limited is a SEBI registered research analyst (Regn. No. INH200007645) based in Bengaluru at No 51 Le Parc Richmonde, Richmond Road, Shanthala Nagar, Bangalore, Karnataka – 560025 creating Thematic & Quantamental curated stock/ETF portfolios. Data analysis is the heart and soul behind our portfolio construction & with 50+ offerings, we have something for everyone. CIN of the company is U74999KA2020PTC132398. For more information and disclosures, visit our disclosures page here.