Why Smallcase CEO bets on smart beta, dividend portfolios

Vasanth Kamath, founder and CEO of Smallcase.
Vasanth Kamath, founder and CEO of Smallcase.


  • Kamath has moderately aggressive appetite, invests in private equity and crypto for long term

The covid-19 pandemic has turned out to be a boon for the stock markets with scores of investors joining the bandwagon in this period. Smallcase, which offers portfolios based on a particular theme, sector or idea, has been a major beneficiary of this influx.

Mint got up and close with Vasanth Kamath, founder and CEO of Smallcase, for its annual series on the personal finance journey of financial services industry leaders.

For Kamath, wealth means financial freedom, and he does most of his investing on his own as per a set asset allocation framework, and then takes professional help in areas where he doesn’t have the expertise or the time to go in-depth. “That’s where I use Smallcase, where there are professional fund managers who keep reviewing the portfolio and managing it," he said.

With 55% allocation to equity, 25-30% in debt, 10% in gold and 5-10% in alternate asset class, Kamath’s portfolio is well rounded.

Kamath has a top-down investment strategy where he first starts with the asset allocation and then within each asset class looks at investment products as well as a particular strategy or exposure. “The majority (allocation) goes into equity. On the other side, I’m running a business. So, a lot of my net worth is also captured there. But on my investment portfolio, I have moderate to slightly aggressive risk appetite," says Kamath.

In terms of returns over the past one year, Kamath’s equity portion is up 19-20%, which is in line with Sensex’s returns, debt has delivered 4-5% returns and while gold is 12% in the green.

Under the alternate asset class category, the head of Smallcase has exposure to some private equity and crypto assets. Kamath, however, doesn’t keep a track on the returns delivered by alternate holdings, as he wants to stay invested in these assets for at least a decade. “The idea was to understand how these asset classes work, and to take some very minimal exposure. I’m sure there’s been some appreciation, but it’s something that I’m very comfortable losing or going to zero as well," he argues.


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For Kamath, gold has become a mainstream asset class over the past year compared to minor exposure under certain multi-asset strategies earlier. Notably, gold is one the key investment decisions that worked for him last year, while emerging market exchange-traded funds (ETFs) as well tech stocks disappointed. “I think the entry timing for that was bad," he rues.

However, Kamath says he wants to keep his equity allocation between 50 and 60%. Within that, there’s more exposure to small-caps and new-age themes that Smallcase has been coming up with. To be sure, 80% of Kamath’s equity allocation is in Smallcase strategies based on smart beta, dividends, and themes such as specialty chemicals, manufacturing, and financial intermediaries. Kamath has also made provision for an emergency fund, which is sufficient for 18 to 24 months. He has earmarked some liquid funds and bank fixed deposits for this corpus.

On the personal front, the CEO of Smallcase took his first international trip since 2006 to Turkey last year. He is planning a vacation later in the year to attend some concerts but is also looking to reduce travel for work and spend more time with the family.

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