Direct indexing: you’re on.
While ETFs still have their place, the benefits of direct indexing are more than finding traction, according to Finance.Yahoo.
Want to create a portfolio up to the task of performing on a par with – or exceeding the performance – of the popular S&P 500 index? Direct indexing’s all over it.
Index funds and ETFs are well and good, but direct indexing also means greater control over fund holding and the potential to outperform, according to Schwab.
Spurred by technological strides that induced investment minimums south, direct indexing – once limited to institutional and high net worth investors – now can sit comfortably in the backyard of a wider swath of investors.
The latest wave of innovation and direct indexing are going hand in hand. Those advances include commission free trading and traditional shares, yielding greater alternatives and control to investors.
"Allowing for personalization makes direct indexing a great fit for those who generally like low-cost passive strategies but are also looking to potentially outperform the index on both before-tax and after-tax basis, or have more flexibility in terms of what they own," said Nitin Barve, CFA, director of Portfolio Analysis and Advice Tools & Policy at the Schwab Center for Financial Research.
- direct indexing
- ETFs
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