Direct Indexing Landscape: The Present and Future

Can asset managers take direct indexing to the masses?

Direct index investing has rapidly gained traction primarily due to its tax optimization and portfolio personalization benefits. Over $260 billion was managed through direct indexes by the end of 2022, highlighting increased interest from affluent investors and prompting major asset managers to pursue acquisitions.

The major advantage of direct indexing is the customization it offers via a separately managed account, allowing investors to tailor portfolios by selecting or excluding specific stocks to align with personal values or financial goals. However, despite direct indexing’s benefits, it faces challenges particularly concerning tracking error, which can significantly impact investment outcomes.

Download this report now for more on the direct indexing landscape and its potential implications for investors and financial advisors alike.