Displaying items by tag: direct indexing

Advisors are rapidly embracing direct indexing, with 76% already using or planning to adopt it within a year, especially among wirehouse and younger “NextGen” advisors. FTSE Russell’s latest survey shows 74% of advisors view direct indexing as essential for serving high- and ultra-high-net-worth clients, who benefit most from its tax-efficient, personalized strategies. 

Despite high awareness—92% of advisors say they’re familiar with the concept—barriers like complexity, lack of client demand, and tech integration challenges persist. Notably, 79% of advisors expect friction in implementation, even though most current users report it’s easier than expected, suggesting a disconnect that education could help address. 

Adoption is strongest among wirehouse firms and younger advisors, who view it as critical for staying competitive in wealth management. 

Direct indexing’s appeal lies in its ability to offer customization, tax benefits, and risk management—features increasingly in demand by affluent clients.

Apex Fintech Solutions has introduced a new Direct Indexing platform designed to help advisors and fintechs create tailored, tax-smart portfolios for their clients. The solution enables investors to directly hold the individual stocks within an index, allowing for fine-tuned adjustments based on personal goals or values like ESG preferences. 

With a minimum investment of $10,000, it opens access to advanced portfolio customization for a broader range of users. The platform offers built-in benchmarks for large, mid, and small-cap equities, and incorporates automated tax-loss harvesting to improve efficiency and returns. 

Seamlessly integrated into Apex’s Augmented Advice™ suite, it simplifies portfolio management while supporting deep personalization. Future upgrades will further enhance customization, including user-defined indices and more precise portfolio adjustments.

Finsum: ESG is a great spot for custom indexing because it is ripe for picking companies that align with investor value. 

Direct indexing has emerged as a popular strategy for investors looking to enhance tax efficiency by owning individual stocks rather than traditional ETFs or mutual funds. Its growing adoption is driven by the rise of passive investing and advancements in fractional share technology, making it more accessible to a broader range of investors.

By selectively selling underperforming stocks and replacing them with others in the index, investors can realize capital losses to offset future gains—a key advantage of this approach.

However, tax benefits are generally front-loaded, meaning that over time, opportunities for tax-loss harvesting diminish as portfolio gains accumulate. To sustain tax efficiency, investors can reinvest funds, donate appreciated stocks, or explore strategies like transitioning holdings into ETFs through in-kind transfers.

Finsum: As direct indexing expands beyond passive strategies, advisors are also exploring actively managed SMAs with built-in tax management features, offering more tailored solutions.

Direct indexing has emerged as a compelling investment approach, offering personalized portfolios and tax advantages. According to experts at Goldman Sachs, this strategy is gaining traction as investors seek tailored solutions. 

The industry has expanded rapidly, with direct indexing assets now totaling nearly $800 billion—more than fivefold growth in recent years. Financial advisors are increasingly integrating direct indexing into portfolios to enhance tax efficiency and customization. 

Unlike ETFs, which track broad indices, direct indexing enables investors to own individual stocks, optimizing tax-loss harvesting opportunities. As adoption rises, technology plays a crucial role in managing the complexity of these highly customized accounts.

Finsum: The technology gains have made a huge impact in the world of finance but particularly with new strategies such as direct indexing where it can have a substantial impact on the cost structure. 

Syntax Data has joined forces with FTSE Russell to bring its indices into the Syntax Direct platform, allowing financial advisors to build more customized investment strategies. This partnership enhances direct indexing, a fast-growing segment in wealth management, by giving advisors greater flexibility to tailor portfolios for clients. 

The demand for personalized investment solutions has surged, with assets in direct indexing swelling from $100 billion in 2015 to over $615 billion today, according to industry estimates. With the integration of FTSE Russell indices, advisors can refine portfolios based on specific factors such as market trends, risk preferences, and fundamental metrics.

 The platform also simplifies managing large, diversified benchmarks, making institutional-grade strategies more accessible in private wealth management. By combining customization with scalability, this collaboration enables advisors to deliver more precise and cost-effective investment solutions.

Finsum: Having access to Russell brings a lot of flexibility to investors when paired with direct indexing and particularly allow them to increase value exposure.