With direct indexing continuing to gain steam, the strategy isn’t just for the ultra-wealthy anymore, according to two panelists at the recent ETF Exchange conference in Miami. According to Randy Bullard, global head of wealth management at Charles River Development, any investor with more than $150,000 can benefit from these custom portfolios. Bullard stated that “Today an advisor might use direct indexing for clients with complex and unique investment policy requirements, but in the future, direct indexing won’t be such a niche thing.” Ben Hammer, head of client development for Vanguard Personalized Indexing, agrees and said “personalized indexing” can benefit many investors. For Hammer, direct indexing is simple, “It’s an individual account that’s managed to track an index. The individual owns the securities, which gives them flexibility to do things that they can’t with a fund. For example, when individual stocks are down, the investor can tax-loss-harvest them to offset gains elsewhere in their portfolio.” Hammer also noted that direct indexing can give advisors an “additional edge“ in their business. He stated, “They can utilize this to really establish an excellent tax profile for a client that might have some complications or give them an extra bit of customization.” However, Bullard acknowledged that direct indexing right now is for equities, not other asset classes.

Finsum:According to two panelists at the recent ETF Exchange conference, any investor with over $150,000 in assets would benefit from direct indexing, as would advisors by providing them an “additional edge“ in their practice.