Top 5 Benefits of Direct Indexing: Our View

Executive summary:

  • When investors want their portfolios to reflect their goals, circumstances and preferences, mutual funds and ETFs can come up short
  • Direct indexing may help solve a variety of investor issues from tax management to charitable giving
  • With the growing array of direct indexing products in the market, choosing the right investment partner is key

Mutual funds and exchange-traded funds (ETFs) have served us well over the years. But as investors demand greater personalization in their portfolios, these commingled vehicles are coming up short. This is especially true for investors with complex tax situations, or those who want to build a portfolio that aligns with their values and specific circumstances.

Direct indexing may be the answer you've been searching for. This innovative investment strategy allows you to choose individual stocks, diversify your clients’ portfolios, and potentially reduce their tax liabilities. It's also cost-efficient and built for investors who want their portfolio to reflect their environmental stance, religious beliefs or values. Discover the power of direct indexing and unlock your clients’ investment potential!

Direct indexing is a game-changing investment strategy that lets your clients own individual stocks – and harvest their losses -- directly instead of investing in a fund or index. You can build a customized portfolio that aligns perfectly with their preferences and goals. In this blog, we'll explore the five main benefits of direct indexing and why it's rapidly gaining popularity among investors.

1. Customization

Customization is one of the most significant benefits of direct indexing. With this approach, your clients have complete control over their portfolio. You can select individual stocks based on their preferences and investment goals and choose to include or exclude specific companies, sectors, or industries based on your client’s values or beliefs. This level of customization is impossible with traditional investment options like mutual funds or ETFs.