The first thing that the research team evaluates is whether an investment objective has a large-enough investable universe to choose from, i.e. enough stocks to invest in.
After the preliminary check, the research team sets out different rules based on the strategy or theme
Since each smallcase tracks a different theme/strategy, the exact methodology used to create every smallcase varies
You check the methodology on the smallcase profile page, by clicking on “Methodology”
When you invest in a smallcase, you are investing in a portfolio that follows a systematic and rules-based approach using measurable data such as price, volatility, earnings, etc. and ignores any subjective opinions
Using data eliminates use of any biases, which impacts all investors including fund managers
In addition, a rules-driven strategy has no room to react to short-term news and events, keeping in mind just the long-term objective.