Fintech company Smallcase enables ETF transactions with four AMCs

Move will enable investors to seamlessly buy Smallcase-curated ETFs from the websites or apps of HDFC AMC, Motilal Oswal AMC, Axis AMC and DSP Investment Managers

Smallcase, a financial technology company, announced on Wednesday that HDFC Asset Management Company (AMC), Motilal Oswal AMC, Axis AMC and DSP Investment Managers have joined its ecosystem. The development will allow investors to seamlessly buy Smallcase-curated exchange traded funds (ETFs) from the fund’s website or its apps.

Since ETFs are exchange-traded products and require a brokerage account (trading and demat) to transact on, the Smallcase gateway displays different brokerage options to the user on the fund house's digital platforms. Users can choose their respective broker, login and place the orders directly.

“Earlier, the flow would be where the user would have to go to their broking app/interface, search for the respective ETF and then place an order. This new flow makes it a lot more contextual for the user to transact from their AMC app,” said Vasanth Kamath, founder and CEO, smallcase.  

The demand for passive funds has picked up in India as largecap funds have been unable to beat the benchmarks. Even first-time investors who come directly into the mutual funds prefer investing in ETFs or index funds.

In the last five years, the Indian passive market took off, with assets growing more than 1200 per cent growth in absolute terms. From March 2016, passive assets under management have grown from Rs 22,409 crore to Rs 3.10 crore in March 2021, at a CAGR of 69 per cent. As of September 2021, there were around 160 passive schemes in India.

Passive funds, with assets under management (AUM) of Rs 4.13 trillion as on September, are among the top category across equity and debt funds. Fund houses say the move will ensure that investors buy ETFs directly from their website and there will be no need to go and buy from brokers.  

Currently, Nippon Life India AMC, SBI MF, Edelweiss AMC for Bharat Bond, Aditya Birla Sunlife AMC and Mirae Asset use the Smallcase gateway to enable this workflow.

“As more asset management companies look to launch ETFs, we aim to offer the smallcase gateway as an industry-standard infrastructure for all fund houses to provide a seamless experience for their clients to make ETFs a core part of their portfolios,” added Kamath.

Apart from AMCs, smallcase has also taken on board new broker partners, social investing apps, digital wealth platforms and fee-based smallcases on existing broker partner platforms. Among these are Groww, Mesha, MintGenie and GoalTeller.