Will explore crypto-based smallcase post regulatory clarity: Vasanth Kamath

Smallcase - a platform to invest in model portfolios of stocks, exchange traded funds and REITs - caught investor's fancy at a time when the markets started booming a few months ago. NIKITA VASHISHT spoke to Vasanth Kamath, founder and chief executive officer at smallcase on how he sees investor behaviour shaping up in 2022 and the road ahead for his company in this backdrop. Edited excerpts.

Has the current volatility shifted investors from active to passive investing? Which smallcase themes are seeing traction?

Both active & passive products have seen a surge over the last 18 months. However, passive products have seen more inflows than earlier. With smallcases, new investors start building their portfolio core with passive, rules-based products and diversify and build a larger portfolio with smaller exposures to actively managed smallcases (where strategies like momentum, dividends, special situations, corporate governance growing the fastest).

How has 2021 shaped up business-wise?

2021 has been our best year till date at smallcase. We became one of the fastest growing investment platforms in India scaling to a user base of 4.5 million, Rs 20,000 crore invested in smallcases and a fast-expanding ecosystem of over 300 partners. Over 180 licensed research and advisory firms create smallcases, representing a large catalog of differentiated exposures including asset allocation, factor-based, thematic, sectoral, special situations etc. On all key metrics, smallcase has grown 4-5x over the last 12 months.

On the corporate front, we closed a Series C financing of Rs 300 crore from new marquee investors including Faering Capital, Amazon & Premji Invest and opted for a 90 per cent remote working policy to provide greater flexibility to the team.

You recently got HDFC, Motilal, and Axis AMCs on board for ETF investing. How has the investor response been?

Four new asset management companies - HDFC AMC, DSP AMC, Motilal Oswal AMC and Axis AMC - have recently integrated the smallcase gateway on their websites and apps to enable ETF transactions. There are a total of nine AMCs, including Nippon AMC, SBI MF, Edelweiss AMC for Bharat Bond, Aditya Birla Sunlife AMC and Mirae Asset who use the smallcase gateway to enable this workflow. The early response has been very promising as investors can now invest, track & manage their ETF portfolios on their fund house apps like they could always do for mutual funds.

Will smallcase venture into cryptocurrency-based investment themes if the government and RBI give the green signal?

Our view on crypto assets (crypto coins as an asset class) is that there is a fast-growing use-case for every investor to have some exposure in their portfolios. That said, the allocation would vary depending on the investor's overall portfolio. We want to explore launching products for crypto exposure once there is clarity from the government and regulators.

2021 was a year of IPOs and 2022 has a strong line-up too. Are you planning to venture into the IPO investment space as well?

We are currently exploring the workflow to enable investors to apply for IPOs with their demat accounts. Given our deep integration with leading brokerages, this is a workflow we will enable soon on the smallcase gateway.