Displaying items by tag: direct indexing

NDVR, a Wealth Optimization firm, recently unveiled NDVR Unified Equity, an actively managed personalized indexing strategy. NDVR, which was created by a team of Quant Ph. D.s and technology innovators, offers a proprietary investing platform for high net worth investors that features personalized direct indexing and active factors such as Extended Market, Low Volatility, Momentum, Quality and Value, tax-loss harvesting, and Socially Responsible Investing. The Unified Equity strategy will target traditional alpha, tax alpha, and fee alpha through direct ownership of U.S. equities and is designed to deliver more aligned portfolios with greater efficiency than index funds and separately managed accounts. The strategy starts with a universe of 1,500 large-, mid-, and liquid small-cap stocks traded on U.S. markets. Investors can then create a portfolio using goals, requirements, and investing preferences in the NDVR Portfolio Lab. The NDVR Optimization Engine analyzes that plan and builds a custom portfolio that is optimized to deliver the growth and secured spending that was targeted by the investor.

Finsum: As direct indexing continues to proliferate, wealth optimization firm NDVR unveiled an active personalized direct indexing strategy that high net worth investors can customize through their platform

When it comes to direct indexing, a little daylight seems to be peeking in.

As investors, young and old, flock to ETFs, you might say direct indexing’s keeping an eye out for its lane, according to blomberg.com.

Two hands on the wheel, of course.

Questions surface about whether investors have an inclination to dive into direct indexing in light of the burgeoning attraction to ETFs, notes new research from Schwab.

If you have an appetite for index funds and ETFs, but greater control over fund holdings and the possibility to outperform, direct indexing just might float your boat, according to schwab.com.

By paring down costs while stepping up access among investors to different segments of the market, index funds and ETFs have put an entirely new face on investing. That said, when it comes to direct investing, contrary to performance historically, make way for the fly in the ointment: when it comes to control over the fund’s individual holdings, control – perhaps of any sort – is nonexistent.

However, times, it seems, have changed. Limited, back in the day, to institutional and high-net-worth investors, today, direct indexing’s available to a wider range of investors. Why? Technological strides, which have coaxed down investment minimums.

Direct indexing, of course, is surging in popularity, according to barrons.com. While Fidelity, Schwab and Vanguard have initiated direct indexing products over the past year or so, direct indexing’s leveraged by only 12% of advisors. Not to pile on – but piling on – a survey showed, when it comes to direct indexing, half of advisors have too clue what it is. 

Um, someone say Wikepedia?

While direct index may be a hot industry topic, not all advisors are buying in. In fact, most clients don’t even know what direct indexing is. Based on comments from a panel of advisors and tech executives at the WealthManagement.com Industry Awards earlier this month, clients aren’t asking for direct indexing and most have never heard of the term. While financial giants such as Goldman Sachs, Fidelity, Vanguard, Pershing, Schwab, and Franklin Templeton are acquiring firms and building out direct index offerings, the strategy has not made its way into client and advisor discussions. Megan Meade, CEO of The Pacific Financial Group told WealthManagement.com, “They’re just not that sophisticated of investors. They don’t have the assets for that. Nor do they need that level of tax efficiency.” Adding to the uncertainty are tech executives who are also unsure about the current value of direct indexing. J. Helen Yang, founder and CEO of Andes Wealth Technologies told the publication, “I am very skeptical about direct indexing as a way to offer personalization.”

Finsum: A recent panel of advisors and tech executives revealed that many haven’t bought into direct indexing yet, while most clients don’t even know what it is.

Interest in directing indexing’s, well, titan

Direct indexing has drawn the attention of the titans of the asset management industry – and the reasons are obvious, according to wealthytrails.com.

Do tell.

Will do. There’s been a steady erosion of the fee management of mutual funds and exchange traded funds stemming from the escalation of ETFs themselves. Room is scant for addition products with more than 2,000 US ETFs and 5,000 US equity mutual funds, based exclusively on a universe of just 3,000 stocks. There’s a search for new revenue generating business areas by the industry. What’s more, interest by clients in customized portfolios, which is burgeoning, is on the radar.

Asset managers, shucking aside a commingled vehicle, execute direct indexing on the behalf of clients by assuming positions reflecting a representative samples of underlying index constituents, according to impactinvresting.com.

What does this approach yield? Customization, which abets flexibility. That includes pinpointing the index to track and exposures to circumvent -- or avoid – and potential tax advantages. That way. You can opt for the actual ingredients and directly call the underlying equities your own. Consequently, you don’t have to make purchases elsewhere.

Think only a number cruncher can efficiently convert tax losses into assets?

Well, why it might not carry engraved business cards, direct indexing also can turn that trick, according to advisorperspectives.com.

Case in point: with clouds threatening a repeat performance in the portfolios of your clients this year – especially in light of the volatility more than making its presence felt in the financial markets. Sure, with intense inflation, the Ukraine war and supply chain headaches putting a dent in corporate profits, the Fed’s stoking rates at a seemingly breakneck pace. Yeah; yowser. That said, however, the market’s volatility yields an idyllic chance to not only tax loss harvest but also showcase how direct indexing – with room to spare, most effectively experiences the reverberations of tax loss harvesting benefits, the site continues.

Against the backdrop of volatility, of course, with direct indexing, the investors owns the individual securities rather than a comingled fund, according to russellinvestments.com. While losses absorbed on receding stocks belong to them, down the line, those setbacks can be leveraged to offset gains. That can mean a significant boost toward paring down the tax bill of the investor.