Displaying items by tag: direct indexing

Based on the results of a recent survey by Broadridge, advisors are still not embracing direct indexing. The survey data showed that just 12% of advisors are “very familiar” with direct indexing. In fact, fewer than one-third even consider themselves “somewhat familiar” with direct indexing, while 40% say they are aware of the technology, and 15% have never heard of it. Ram Ramaswamy, Head of Custom Direct Indexing at Neuberger Berman, told Ignites that he has encountered resistance from advisors to any new investment option. “The first thing we hear from a lot of advisors is that they are comfortable using the ETF and mutual fund model,” said Ramaswamy. In addition to resistance to new investment options, data gathering could be another impediment. Cindy Galiano, Head of Product, Investment Management at Morningstar Wealth, told Financial Advisor IQ, “Implementing direct indexing successfully requires a lot more than a Bloomberg terminal and a list of client holdings. An enormous amount of data is needed that ranges from benchmarks and prices to sophisticated risk models and portfolio optimization tools.”

Finsum:Due todata gathering and resistance to new investment options, advisors are still not embracing direct indexing. 

Category: Wealth Management

Keywords: advisors, direct indexing, tax efficiency, ESG 

Morningstar recently announced the launch of Direct Indexing. The new offering will draw from industry-leading research, technology, and insights from Morningstar to help deliver greater personalization, automation, and tax efficiency for advisors and their investors. It will utilize many of the firm’s in-house capabilities, including Morningstar's Investment Management, Morningstar Indexes, Morningstar Sustainalytics, and Morningstar Equity Research to create and manage personalized investment strategies. Initially, the direct Indexing portfolios will be made available through the Morningstar Wealth Platform. This is one of the firm's first major product launches from Morningstar Wealth, a new group combining managed portfolios from Morningstar's Investment Management group, portfolio management software Morningstar Offices, investment data aggregator ByAllAccounts, and the individual investor experience across Morningstar.com. Morningstar Wealth is expected to introduce additional functionality and capabilities to advisors and firms in the coming year. According to Morningstar, approximately 61 percent of advisors indicate they are using or are considering using direct indexing.

Finsum:With a majority of advisors using or planning on using direct indexing, Morningstar has launched its own Direct Indexing offering.

Category: Wealth Management

Keywords: direct indexing, advisors, clients, tax efficiency

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.

NDVR, a Wealth Optimization firm, recently unveiled NDVR Unified Equity, an actively managed personalized indexing strategy. NDVR, which was created by a team of Quant Ph. D.s and technology innovators, offers a proprietary investing platform for high net worth investors that features personalized direct indexing and active factors such as Extended Market, Low Volatility, Momentum, Quality and Value, tax-loss harvesting, and Socially Responsible Investing. The Unified Equity strategy will target traditional alpha, tax alpha, and fee alpha through direct ownership of U.S. equities and is designed to deliver more aligned portfolios with greater efficiency than index funds and separately managed accounts. The strategy starts with a universe of 1,500 large-, mid-, and liquid small-cap stocks traded on U.S. markets. Investors can then create a portfolio using goals, requirements, and investing preferences in the NDVR Portfolio Lab. The NDVR Optimization Engine analyzes that plan and builds a custom portfolio that is optimized to deliver the growth and secured spending that was targeted by the investor.

Finsum: As direct indexing continues to proliferate, wealth optimization firm NDVR unveiled an active personalized direct indexing strategy that high net worth investors can customize through their platform

When it comes to direct indexing, a little daylight seems to be peeking in.

As investors, young and old, flock to ETFs, you might say direct indexing’s keeping an eye out for its lane, according to blomberg.com.

Two hands on the wheel, of course.

Questions surface about whether investors have an inclination to dive into direct indexing in light of the burgeoning attraction to ETFs, notes new research from Schwab.

If you have an appetite for index funds and ETFs, but greater control over fund holdings and the possibility to outperform, direct indexing just might float your boat, according to schwab.com.

By paring down costs while stepping up access among investors to different segments of the market, index funds and ETFs have put an entirely new face on investing. That said, when it comes to direct investing, contrary to performance historically, make way for the fly in the ointment: when it comes to control over the fund’s individual holdings, control – perhaps of any sort – is nonexistent.

However, times, it seems, have changed. Limited, back in the day, to institutional and high-net-worth investors, today, direct indexing’s available to a wider range of investors. Why? Technological strides, which have coaxed down investment minimums.

Direct indexing, of course, is surging in popularity, according to barrons.com. While Fidelity, Schwab and Vanguard have initiated direct indexing products over the past year or so, direct indexing’s leveraged by only 12% of advisors. Not to pile on – but piling on – a survey showed, when it comes to direct indexing, half of advisors have too clue what it is. 

Um, someone say Wikepedia?