Altruist is launching a new direct indexing product at a low $2000 minimum coming at the end of May. Altruist is using fractional shares in order to be at the lower bound of direct indexing minimums. With direct indexing investors own the underlying asset, which comes with tax alpha but usually at a very high minimum footprint. The index will track a cap-weighted 500 stocks similar to the S&P. However, the penalty for this ultra-low minimum is that investors won’t have the ability to customize their final product, which greatly affects the value of the DI offers. They will allow value-based screens later thin the year according to management.
Finsum: Direct indexing without dropping for tax alpha is a bit of a puzzle because it’s hard to see the advantage over ETFs.