Displaying items by tag: direct indexing

Direct indexing has recently become a hot topic in the financial industry and for advisors looking to differentiate themselves from the pack, fund giant Vanguard recently identified four situations that they should consider using direct indexing. The first is tax-loss harvesting. For example, when an index is up, some of its holdings can be trading at a loss. An investor in a direct indexing strategy can sell those stocks and create a tax loss that can be used to offset taxes that are due as a result of an overall gain for the index. The firm also lists ESG as another reason. A custom index can be designed to avoid shares of firms involved with fossil fuels. The third situation is factor investing, or investing in companies that have specific factors such as growth, value, or quality. A custom index can be created to meet those criteria. The last situation Vanguard recommends is diversification. A custom index can be built to accommodate an investor that may be required to hold a certain number of shares in his or her employer.

Finsum:According toVanguard, tax-loss harvesting, ESG, factor investing, and diversification are four strategies that advisors should consider when building custom indexes.

Published in Wealth Management
Saturday, 17 September 2022 05:03

Direct Indexing ESG Fintech Raises $50 Million

Ethic, which is an ESG investing fintech that offers direct indexing to investment advisors, has raised $50m in a Series C funding round. Ethic is available to advisors that use the custody services of Fidelity, Charles Schwab, U.S. Bank, Northern Trust, Morgan Stanley, or Pershing. The company offers custom direct indexing portfolios that reflect a client’s values, financial goals, and tax preferences. The firm also offers impact reporting and educational materials. The asset manager, which focuses on socially responsible portfolios, currently has over $2 billion in assets. The latest funding round was led by Jordan Park Group. Other firms involved in the funding round include UBS’s venture arm, UBS Next, and existing investors such as Oak HC/FT, Nyca Partners, Sound Ventures, Urban Innovation Fund, and Kapor Capital. In an announcement, the firm stated that the new capital will “support Ethic’s ambitious growth plans, including expansion into new markets and products, and continued investments in its platform experience.”

Finsum:Direct indexing firm Ethic raised $50 million in a new funding round to expand into new markets and products.

Published in Wealth Management
Thursday, 08 September 2022 14:17

Direct indexing can be, well, taxing

et’s see: an IRS audit. Or this: your taxes are hightailing it north.


Then there’s the old reliable: the volatility of the financial markets.


Ah, yes. Bum, bum and, um, bummer of all.


That said, on the bright side, to leverage the dividends of tax loss harvesting, there’s direct indexing, according to advisorperspective.com.

And what’s with the gold dust direct indexing boasts in light of a topsy turvy market? Well, the investor owns the individual securities rather than a commingled fund, so they take ownership of any losses absorbed on receding stocks, the site continued. So, when it comes to offsetting gains, the investor can tap those setbacks. And, presto, that can go quite a way in paring back the tax bill of an investor.

But it’s not all tinsel town and balloons. On one hand, says experts, fees and accounts minimums might be heading south, on the other, it could be that direct indexing’s will cut a deeper swatch in your wallet and; yes, isn’t there always more: might be more difficult to deal with than passive investing, according to cnbc.com.

Category: Eq: Dividends, 

Keywords: direct indexing, financial... etc.

Published in Eq: Dividends

NDVR, a Boston-based advisor that combines technology and dedicated financial advisors to build and manage custom portfolios for high-net-worth investors, recently announced new capabilities that allow it to create hyper-customized portfolios reflecting the socially responsible investing values of individual clients. These new capabilities are part of the firm’s Unified Equity strategy, which includes direct indexing, active factors, tax-loss harvesting, and SRI. The company builds portfolios that directly reflect the values of its clients while targeting a combination of growth, volatility, and future cash-flow requirements. To incorporate SRI, NDVR will utilize data generated by the non-profit shareholder advocacy organization As You Sow's Invest Your Values screening platform. NDVR’s custom portfolios are designed to deliver what the firm calls Construction Alpha™, the aggregate performance enhancements expected from investment alpha, cost savings, and tax efficiency.

Finsum:NDVR, an advisor that offers customized portfolios through direct indexing, announced that its portfolios will now reflect the SRI values of individual investors.

Published in Wealth Management
Sunday, 28 August 2022 07:18

Direct indexing….custom made

The idea of customization rocks your financial world, does it? 

Well, then, direct indexing just might speak to you. 

You might that to kick things off, most direct indexing could be labelled as somewhat boiler plate, yielding access to a handful of core indexes like the S&P 500 or Schwab 1000, according to yahoo.com. Then comes the customization, with the opportunity to personalize the portfolio. How? By pruning out certain companies it contains.

The catalyst behind such decisions could be, oh, say, personal values and beliefs like leaving out fossil fuel producers gun manufacturers and alcohol, the site continued.

The degree of transparency into each holding available through direct indexing can generate additional chances to personalize investments.

Investors can scoop up the stocks of an index instead of a mutual find or exchange-traded fund through direct indexing, according to cnbc.com.

While direct indexing was once the exclusive domain of those boasting mega dollars, the mainstream’s been getting on board as well. The likes of Vanguard, BlackRock and Morgan Stanley are providing offerings to abet the ability of individuals to personalize their positions based on factors like risk tolerance.



Published in Eq: Financials
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