Direct indexing allows investors to own individual stocks in a customized portfolio, offering tailored market exposure, tax-loss harvesting, and alignment with personal goals. Unlike ETFs, which can only tax-loss harvest during broad market declines, direct indexing captures tax benefits throughout the year.
Advisors increasingly use it as a core strategy for U.S. equity exposure, leveraging its tax advantages to offset gains from other parts of a client’s portfolio. Technology enables the efficient management of thousands of unique accounts, optimizing trades daily for greater customization and tax efficiency.
It is also a powerful tool for diversifying concentrated stock positions or preparing for future liquidity events by accumulating tax-loss reserves.
Finsum: When choosing a provider, factors such as investment performance, tax alpha, and client service are critical to the goals of direct indexing.
- direct indexing
- custom indexing
- tax efficiency
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
