The concept of direct indexing is to build an investment portfolio that models a specific index. Financial advisors buy a representative share of the index’s stocks and manage those assets by rebalancing the portfolio over time—monthly, quarterly, or even more often during volatile periods.
Direct indexing is a more active strategy when compared to index funds or ETFs, complete with higher fees. Historically, only larger accounts would implement such an approach. But direct indexing offers a few distinct benefits that may justify the added cost for some, such as those seeking more flexibility or added tax savings.
With two decades of developing technology solutions for financial services firms, Excellarate offers tools and technologies that will help advisors to successfully bring the benefits of direct indexing to a wider audience.
Unique Benefits of Direct Indexing
Direct indexing generates tax alpha through several tax advantages, creating a tax-loss harvesting balance that typically offsets higher upfront investment fees
Personalization and Exclusions
Investors add or exclude a particular stock or category of stocks easily and for any reason—like tax purposes or to carve out legacy holdings—enabling advisors to more precisely shape an index to meet an investor’s goals.
The flexibility of direct indexing enables investors to construct a portfolio in line with specific objectives, like Environmental Social Governance (ESG), Socially Responsible Investing (SRI), and other personal or faith-based values.
Excellarate Can Do That.
Customized solutions for end-to-end portfolio management and rebalancing
User-friendly tools and technologies include dashboard with customized layout and visualizations
Automated data analytics provide valuable insights
Seamlessly integration with third party systems and data sources
Scalability accommodates shifts in volumes and future growth
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