What are curated portfolios?

Do you seek advice around stocks you pick or you are that aggressive investor who studies the company's finances too deeply. Well if you are the former one, then there is something called a curated portfolio which you should look for. Yes, you heard that right, exclusively for retail investors like us!! Do give it a read below

Investors, eyeing higher returns from equities, could consider specialised portfolios put together and managed by registered financial advisors. Wealth managers say these baskets of stocks are gaining popularity among retail investors who want to invest in equities other than through mutual funds but do not have to expertise to pick stocks.

Who are they?

This offerings are by platforms like Smallcase and WealthBasket. Both platforms are directly integrated with brokers like Zerodha, Angleone, Upstox etc. Platform will place buy orders for all the securities in a basket via the broker. Shares are directly credited to your account the next day. Investors have the option to SIP in each portfolio. They can also exit the entire basket at any time or choose to sell individual stocks within the portfolio separately.

How are curated portfolio monitored?

They are closely monitored by the experts(SEBI registered) who run them and are rebalanced periodically either at portfolio manager discretion or at specific intervals to ensure that the portfolio remain aligned with it's strategy.

In curated portfolios, investors are told when to buy or sell or make changes to the basket. The portfolio style could be based on various themes or ideas which could be sectoral, factor driven, a combination of large-, mid- or small-caps

How do investors benefit?

1. Curated portfolios allow investor to venture beyond traditional mutual funds. Retail investors like us who can't afford PMS offerings can tap on this option to get the expertise of professionals handling curated portfolios.

Minimum investment in PMS(Portfolio management services) = 50 lakhs

Curated portfolio have lower offerings =(100-1000 INR)

2. Investors must note that unlike mutual funds, curated portfolios allow a free hand to the fund manager. He can construct and run the portfolio without restrictions. The investor is also free to customise the basket to his taste.

3. Another benefit is an investors can invest any time during trading hours by taking advantages of dips. In mutual funds investors get to purchase units at NAV price which is computed at the end of trading day.

Pitfalls in curated portfolios

1. While investors get readymade portfolio and regular rebalancing calls, the onus of execution is on investor. Any delay in rebalancing can lead to missed opportunities.
2. Rebalancing portfolio is less tax efficient compared to mutual funds. Rebalancing in mutual funds has no direct tax implications on investors. But selling stocks to rebalance can attract some tax depending in what tax bracket you fall.
3. Dividends from stocks attract tax but you don't get taxed for dividends from mutual funds.
4. Rebalancing in curated portfolio attract more brokerages fees as you buy/sell shares

What does it Cost?

Both platforms have a different fees structure. Some platform charge a recurring fees. You have to subscribe to a theme to see how much it cost per 6/12 months. Below is the screenshot from Smallcase.

Conclusion

It depends on one's choice if they want to have more control over the choices of stocks they pick. Like mutual funds doesn't leave you with any choice around stock selection.

Moreover if you are ready to shell out some money for the advices you get I feel it is a good option.

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