Displaying items by tag: custom indexing

A new generation of technology is at our fingertips, and whether that's Netflix or Amazon people want the technology to service them now more than ever. Index tracking funds are really the cable box in the modern world and investors want a more tailored experience that only custom indexing can offer. Partners at Fidelity are saying that a hyper-customized multi asset portfolio is really the future, and given how popular trends like ESG are becoming, advisors are really needing better tools to attract and maintain clientele. Custom indexing can hit a multitude of demands investors want and also drive home a better fee for their workload as compared to traditional ETFs.

FINSUM: The world of a custom index, where stocks can be added and dropped for any reason is here, and it's probably on a mobile platform soon.

Direct Indexing is the process of holding the stocks in the weights of the underlying Index, rather than buying an ETF that tracks an index, and this new opportunity is being adopted by financial heavyweight Charles Schwab and will be available to investors. Starting with the large-cap Schwab 1000 Index, S&P Small Cap 600 Index and MSCI KLD 400 Social Index, Schwab will be available to mix and match to customize a portfolio to hit the investor’s exact needs. However, this option won’t be available to just any investor. The indexing platform will require a $100,000 account size. Adoption of direct index investing is one piece of Schwab’s expansion into personal investing, that goes hand-in-hand with environmental, social, and governance investing and other thematic investing.

FINSUM: Schwab is the latest of Vanguard, Fidelity, BlackRock and Morgan Stanley to jump into index investing. However Schwab’s pricing format is not revealed and its advantages over a low fee ETF are not yet clear.