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Investment platform Smallcase is extending its ‘basket investment’ concept to mutual funds (MFs) in a bid to expand its product suite.
Akin to its direct stock and exchange traded fund (ETF) offerings, the MF baskets will be prepared by research analysts (RA) and registered investment advisors (RIAs).
The company plans to launch the MF vertical by June, said Vasanth Kamath, founder and CEO of Smallcase.
“In the last few years, investors have been asking us for similar offerings in asset classes beyond stocks and ETFs. With the announcement of the execution-only platform (EOP) framework, we decided to expand to MFs,” he said.
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Smallcase took the EOP licence from the Association of Mutual Funds in India (Amfi) last year.
The licence allows the distribution of direct plans of MFs without having to register as a stock broker or RIA.
According to Kamath, while the plan is to expand the portfolio share of existing users, the MF foray will also lead to expansion in investor base.
The business model will also remain the same as RAs and RIAs will be allowed to charge a subscription fee. Smallcase will get the transaction fee from MFs.
EOPs are allowed to charge MFs up to Rs 2 for every transaction excluding the payment gateway charges, which are charged separately.
Kamath said the firm is already working with RAs to RIAs to prepare the MF baskets to prepare for the launch.
“We are taking an approach similar to stocks and ETFs. RAs and RIAs will be creating MF smallcases depending on their expertise. Some may focus on debt MF schemes, while others may choose to create asset allocation baskets,” he said.
Recently, Smallcase also entered the asset management business in partnership with Zerodha. The platform has also started offering loans against MFs.
