Retail investors tapped index-based investing amid Iran war: Vasanth Kamath

Retail investors remain resilient amid Iran war volatility, shifting towards index investing, diversification, and long-term strategies, says smallcase CEO.

Even as geopolitical tensions dent global markets, retail investors have not abandoned investing, says Vasanth Kamath, Founder & CEO, smallcase. In an email interview with Nikita Vashisht, Kamath says what's changing is not their presence, but their approach towards markets—marked by greater caution, diversification, and a shift towards more structured, long-term investing. Edited excerpts:

 

What has been the trajectory of retail flows during the Iran war crisis?

 

Events like geopolitical conflicts typically increase short-term volatility, but what’s interesting is that retail participation hasn’t seen a sharp disruption so far. Industry data also reflects this resilience with continued inflows and sustained systematic investing behaviour. However we are seeing a shift in how investors are deploying capital. There’s more caution, allocations are becoming staggered and investors are leaning towards simpler, more diversified exposures in the form of index-based products. So rather than a directional shift in markets or participation, it’s really a shift in investor behaviour from reactive to more measured and allocation-driven. 

 

 

What are the kinds of portfolios/investment themes that investors are choosing on smallcase over the past few months?

 

Over the last few months, the shift has been less about chasing high-growth themes and more about balance. On the smallcase platform, we’re seeing relatively higher engagement with portfolios that are positioned around stability—large caps, dividend-based strategies and sectors with stronger balance sheets such as private banking and capital goods. At the same time, long-term themes like manufacturing or digital continue to see interest. So overall, it’s a move towards more thoughtful portfolio construction.

 

The geopolitical crisis has come alongside Sebi's scrutiny on derivatives. How could this affect volumes for smallcase and the broking ecosystem?

 

Global developments like energy prices and geopolitical events, along with regulatory changes, are part of how markets evolve and can influence sentiment in the short term. As a technology platform, we don’t interpret these events or take a view on market direction. Our role is to provide investors with access and tools to participate in markets across different conditions. Overall, while market conditions may change, the focus for platforms like ours remains on enabling consistent and seamless participation for investors. 

 

How can investors preserve their capital in this market?

 

Rather than reacting to specific events, what we consistently see working for investors on the platform is discipline in approach. This includes diversification, staggered investing and aligning portfolios to long-term goals instead of short-term triggers. Our role as a platform is to enable these approaches through access, transparency and ease of execution.

 

smallcase recently launched an option to invest in global equities. How has the investors' response been, especially amid the Iran war uncertainty?

 

The initial response has been encouraging. Periods of uncertainty often remind investors of the importance of diversification. We’ve seen steady interest in global exposure as investors look to balance domestic risks with opportunities in other markets. While there may be short-term caution, the long-term case for global diversification continues to resonate with investors.