Smallcase platform revolutionized the way of investing for retail investors. The platform hosts 80+ investment advisors, and provides access to 100s of portfolios. These portfolios can be categorized based on sectoral themes, market cap allocation, investment style of portfolio managers, etc.
Smallcase provides a search feature to help investors find what they are looking for. Investors can sort the smallcases using minimum investment required and returns. However, this sorting technique doesn’t solve the problem for retail investors as there is still a lot of choice to be made while zeroing in the best smallcase.
We made an attempt to figure out what is the best smallcase to invest in 2023. We considered the minimum investment requirement, subscription fee charged, returns in different market cycles over the past 3 years, investment style, diversification, and the team (size and quality) behind the smallcases.
Let us announce the result first followed by the analysis. Gulaq Gear 6 smallcase has emerged as the best smallcase to invest in 2023. The following are the key factors we analyzed:
Returns:
Gulaq Gear 6 has 100% equity allocation. The portfolio, if benchmarked against Nifty Multicap, has generated much higher returns beating the benchmark consistently. Gulaq Gear 6, since launched in May 2020, has given 226% returns compared to 98% returns by Nifty Multicap index. Similarly, if we look at 2022 returns Gulaq Gear 6 has given 21% returns compared to 3% returns in Nifty50.
The following graph shows the returns comparison since launched in May 2020.
The following graph shows the yearly returns comparison of Gulaq Gear 6 and Nifty MultiCap. Since Gulaq portfolios are launched in May 2020, we considered the returns from May 2020 to Dec 2020, in 2020. We have seen bull markets in 2020, 2021 and Gulaq has outperformed Multicap in such markets. On the other hand, Gulaq has impressed investors with its stunning performance even in flat markets of 2022.
Subscription fee:
Subscription fee can eat away your returns if charged a hefty amount. We have looked at Top 5 popular smallcases, and seen the pricing in the range of Rs. 6,000 to 15,000. This pricing will make sense only in those cases with an average investment of at least Rs. 5 Lakhs. On the other hand, Gulaq Gear 6 is charging Rs. 3,600 which starts to make sense even at an average investment of Rs. 1.8 Lakhs. As investors increase the investment, the fee charged will be dead cheap as a proportion of investment.
Minimum investment required:
Basket investing is a new way of investing. Retail investors are taking time to believe, and experiment with smallcases. Hence, the lower the minimum investment the higher is the chance to test your confidence in following basket investing. Gulaq Gear 6 has a minimum investment requirement of Rs. 24,000 compared to popular smallcases with an average minimum investment at around Rs. 70,000.
Investment philosophy:
There are multiple smallcases made available on momentum investing. These smallcases track momentum factor, and construct portfolios accordingly. We have seen that in bull markets momentum works, but on falling markets it doesn’t. So, investors are likely to underperform the markets depending on the market cycle.
Gulaq follows multi-factor investing, tracking 130+ factors ranging from fundamentals to technicals to macroeconomic factors. Hence, Gulaq Gear 6 portfolio is like an all-rounder and can pick the best performing factors depending on the market cycle. This is why Gulaq Gear 6 has outperformed the benchmark consistently.
Diversification:
Unlike the majority of the smallcases, Gulaq’s portfolio construction is sector agnostic. Gulaq Gear 6 portfolio is diversified across sectors, and market caps as well. The biggest advantage is the factor diversification Gulaq has in its portfolio construction process. We have seen smallcases being offered based on a speculation of a specific sector or theme or a group of stocks of a particular conglomerate. These smallcases face concentration risk, whereas Gulaq has minimized the concentration risk.
Gulaq Team:
Gulaq is the retail investment advisory arm of Estee Advisors. Estee is a pioneer in Quant investing in India. The Founder & CEO, Mr. Sandeep Tyagi is an IITD and Columbia business school alumni with 30+ years of experience in portfolio management, consulting, and analytics. Gulaq investments is headed by Mr. Vivek Sharma, an IIT Kharagpur alumnus with 15+ years of experience in trading and portfolio management.
Being a pioneer in Quant investing, Estee has built a team of 120+ Quant professionals from premium institutions such as IITs, IIMs, ISB, NSIT, etc. The team has built products like I-Alpha, which has never seen loss in any month over the last 14 years.
Gulaq has a strong team which refined quant investing models and the performance is clearly reflected in their portfolio performance.
Conclusion:
We have benchmarked Gulaq Gear 6 smallcases with most of the popular smallcases. The consistency in outperforming markets, lower subscription fees, data driven investment philosophy, and a very strong team behind the portfolios makes it the best smallcase to invest in 2023.
