07.13.2023 - Direct Indexing
Is Direct Indexing Right for your Clients?
Presented by John Rekenthaler, Morningstar
Direct indexing, which involves buying the individual stocks that comprise an equity index directly rather than through a fund, has gained prominence as large firms (Schwab, Fidelity, Vanguard) have built platforms to support the strategy. Is it right for your client? What are the use cases? Which factors should you evaluate when you consider direct indexing?
Join Morningstar’s director of research John Rekenthaler when he shares examples of clients who may benefit from direct indexing; e.g. those who hold significant amounts of tax-inefficient investments in taxable accounts. John will also review eight factors that may determine if direct indexing is right for your clients.
Attendees Comments:
A few comments from listeners:
Direct indexing simply isn't worth it for the average retail investor. It's a high-net-worth strategy.
- Maria R.
I wasn't familiar with direct indexing. Excellent summary of what it is and under what circumstances it is beneficial.
- Marian J.
I learned the use of direct indexing for tax harvesting and annual income thresholds needed for direct indexing to be effective.
- Jacqueline B.
Ironic that tax loss harvesting seems so celebrated as a strategy...after all it means you have to have losers in your portfolio...the foe we all battle!
- Kevin K.
This helped to draw a basic line of who benefits from direct indexing.
- Richard H.
Direct indexing simply isn't worth it for the average retail investor. It's a high-net-worth strategy.
- Maria R.
I wasn't familiar with direct indexing. Excellent summary of what it is and under what circumstances it is beneficial.
- Marian J.
I learned the use of direct indexing for tax harvesting and annual income thresholds needed for direct indexing to be effective.
- Jacqueline B.
Ironic that tax loss harvesting seems so celebrated as a strategy...after all it means you have to have losers in your portfolio...the foe we all battle!
- Kevin K.
This helped to draw a basic line of who benefits from direct indexing.
- Richard H.
Direct indexing simply isn't worth it for the average retail investor. It's a high-net-worth strategy.
- Maria R.
I wasn't familiar with direct indexing. Excellent summary of what it is and under what circumstances it is beneficial.
- Marian J.
I learned the use of direct indexing for tax harvesting and annual income thresholds needed for direct indexing to be effective.
- Jacqueline B.
Ironic that tax loss harvesting seems so celebrated as a strategy...after all it means you have to have losers in your portfolio...the foe we all battle!
- Kevin K.
This helped to draw a basic line of who benefits from direct indexing.
- Richard H.