Sayantan Chakraborty
The House Of TATA smallcase is a stock portfolio curated by Windmill Capital for Smallcase. The portfolio (also known as smallcase) is a collection of TATA Group stocks listed on the Indian stock exchange.
Though it might look like investing in the top TATA stocks using a Smallcase is full of pros, there are some hidden cons which is easy to overlook. So in this article, we will have a detailed discussion about the House Of TATA Smallcase.
- Details About The House Of TATA Smallcase
- Stocks In The House Of TATA Smallcase
- Returns Generated By The House Of TATA Smallcase
- Fees And Charges Of The House Of TATA Smallcase
- Rebalancing Of The House Of TATA Smallcase
- Customizing The House Of TATA Smallcase
- Should You Invest In The House Of TATA Smallcase?
Details About The House Of TATA Smallcase
Smallcases are unique stock baskets or stock portfolios made using listed stocks or ETFs. Stocks or ETFs in a smallcase are chosen based on a similar theme or strategy. In the case of the House of TATA smallcase, as the name suggests, stocks are picked from the roster of listed TATA Group companies.
Some stock basket in Smallcase comes with a subscription fee, but the House Of TATA smallcase is a FREE smallcase. Investors don’t have to pay any subscription fee to access the smallcase.
This TATA smallcase was made by the in-house research analyst group of Smallcase, Windmill Capital. Launched on 13th February 2021, the same research analyst group currently maintains and rebalances the stock basket.
Some of the most popular and top-performing smallcases, namely the All Weather Investing smallcase, the Top 100 Stocks smallcase, the Dividend Aristocrats smallcase, the Equity and Gold smallcase, etc., were made by Windmill Capital. And at the moment, Windmill Capital maintains a total of 55 smallcases.
Stocks in the House Of TATA smallcase are selected after in-depth research and rigorous analysis, and the smallcase is rebalanced every quarter. And by investing in this smallcase, you will invest in some of the top brands in India. For example – Starbucks, Vistara, Taj Hotels, Titan, Tata Tea, etc.
And investing in the House Of TATA smallcase also takes care of sector diversification as companies in this portfolio operate in sectors such as IT, Steel, Precious Metals, Gems and Jewelry, Chemicals, Power Generation, Hotels, FMCG, etc.
The minimum investment amount for investing in the House Of TATA smallcase is around ₹19,000. And it changes according to the stock price of the individual stocks present in the portfolio.
As of now, the smallcase has more than 78% weightage in Largecap TATA stocks and just over 21% weightage in Midcap TATA stocks, which makes the House Of TATA smallcase similar to a thematic Largecap Mutual Fund.
The 2-year CAGR of the House Of TATA smallcase stands at 25.14%. It might look lucrative, but investors with a low-risk appetite should be careful when investing via the House Of TATA smallcase as the volatility of the smallcase is high.
Stocks In The House Of TATA Smallcase
As of May 2023, the House Of TATA smallcase contains 8 TATA Group stocks among 17 listed on the Indian stock exchange. Stocks.
List Of Stocks In The House Of TATA Smallcase
- Voltas
- Titan Company Ltd
- Tata Consultancy Services Ltd
- Tata Steel Ltd
- Tata Power Company Ltd
- Tata Consumer Products Ltd
- Tata Chemicals Ltd
- Indian Hotels Company Ltd
Some individual stocks in the smallcase have generated handsome returns in the last 1-year.
For example –
In the last 1-year, Titan has generated a return of more than 24%, and the stock of Indian Hotels has generated a return of more than 64% for its investors.
And most of the stocks present in the House of TATA smallcase are dividend payers, which is essential for investors looking to generate regular income from their stock investments.
Returns Generated By The House Of TATA Smallcase
Since launch, the House Of TATA smallcase has generated a total return of 65.66% for its investors. The value of an investment of ₹100/- made on 15th February 2021, Monday, would now stand at ₹165.66/-.
In the last 1-year, the smallcase has generated a return of 6.94%, which is relatively low compared to the Nifty 50’s return of more than 13% in the same period.
An investment of ₹100/- a year ago in the House Of TATA smallcase is now worth ₹106.94/-.
And in the last two years, the House Of TATA smallcase has generated a return of 44.06%. In the same time frame, Nifty 50 gave a return of nearly 20%.
The value of an investment of ₹100/- in the smallcase made two years ago now stands at ₹144.06/-.
Since launch, if an investor invested ₹100 every month in the House Of TATA smallcase via the SIP method, the total investment amount would stand at ₹2,600/-.
And the value of that investment would now stand at ₹2,774/-. It means the total return generated on the investment of ₹2,600/- was ₹174/- or 6.69%.
A return percentage of 6.9% is not that great, considering some of the top Large Cap Mutual Funds gave returns above 12% in the last two years.
Fees And Charges Of The House Of TATA Smallcase
Though you don’t have to pay any subscription fee to access the House Of TATA smallcase, you do have to pay transaction charges to the stock brokers through which you invest in the smallcase. And those charges can take a large portion out of the total profit generated by the smallcase.
Let us understand the different charges involved when investing in a smallcase with an example.
On investing ₹1 Lakh in the House Of TATA smallcase in a year using Upstox as your stock broker, you have to pay ₹1,519/- as transaction charges.
For context, ₹1,519/- is 1.52% of ₹1 Lakh.
Below is the picture breaking down all the various charges involved when investing in the House Of TATA smallcase.
Rebalancing Of The House Of TATA Smallcase
The House Of TATA smallcase is rebalanced by Windmill Capital every quarter.
If any stock is discarded from the smallcase during the rebalancing process, you will be prompted to do the same in your portfolio. And if any new company is added to the smallcase after rebalancing, it will start reflecting from your next investment.
Once you accept Smallcase’s prompt to rebalance your portfolio, it will automatically sell all the stocks removed during rebalancing, even if those stocks have generated negative returns since your investment.
We particularly don’t like the rebalancing aspect of Smallcase as we at Money Premier like to promote long-term investing. Here we have explained why we don’t like rebalancing.
Customizing The House Of TATA Smallcase
If you are a seasoned investor and know the ins and outs of stock analysis, then Smallcase provides the option to add or remove stocks of your choice from the House Of TATA smallcase. But if you customize the smallcase’s portfolio, you will not receive any rebalancing updates in the future.
If you want to customize the portfolio of the House Of TATA smallcase, you might add some Large Cap companies operating in sectors that are not covered by the stocks present in the original portfolio.
Adding Large Cap stocks operating in sectors such as Banking and Finance, Oil and Gas, FMCG, etc, might help.
Should You Invest In The House Of TATA Smallcase?
Investors with a high-risk appetite and long-term investment horizon should invest in a thematic smallcase like the House Of TATA smallcase. And investors should not invest more than 8% to 10% of their total investable capital in the smallcase.
Though the House Of TATA smallcase is FREE and doesn’t have any subscription fee, investors have to pay transaction charges when investing in the smallcase. And those additional charges do add up to a large amount over time.
In our Smallcase review, we have explained why investors should not invest directly via a smallcase and instead use a smallcase as a screening tool.
The unnecessary costs involved with smallcase are too high. And those unwarranted fees do add up to a large amount, ultimately taking a big chunk out of your profits.
Rebalancing acts as a cherry on top, adding extra costs in the form of taxes, brokerages, etc.
Though just over two years is a very short time to judge the capabilities of a thematic portfolio, generating more than 65% return in the same period is quite an achievement. But the short-term performance of the smallcase is a bit concerning.
Who Should Invest In The House Of TATA Smallcase?
The House Of TATA smallcase is ideal for experienced investors whose personal stock portfolio size exceeds at least ₹45 Lakh who now want to make a small thematic portfolio, and who are aware of the charges and costs involved in investing via a smallcase.
Average investors should refrain from investing in such a focused thematic smallcase. At the most, they can use the House Of TATA smallcase as a screener.
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Ownership Disclosure: People associated with Money Premier (https://moneypremier.net/) have stakes in the stock/s or share/s discussed in the above article.
Hey Moneypremier,
In the ownership disclosure you said you have stakes in the stocks. Have you guys invested in this house of tata smallcase? If yes, how much return have you received?
Thanks.
Regards,
Mohit
Hello Mohit,
No, we didn’t invest in the House Of TATA smallcase. But we do have one stock in our portfolio which is also present in the House Of TATA smallcase, at the moment. That is why we have disclosed our ownership.