Direct Indexing

For better or worse, it’s a term the investment industry seems to have embraced. At its simplest, direct indexing refers to a form of passive investing in which one gains direct ownership of the individual securities that compose a given benchmark. By owning the underlying names in that benchmark, an investor gains greater control over a passive allocation, allowing for tax-loss harvesting at the security level, among other advantages. This stands in contrast to an index fund or ETF, which can offer the same exposure but not the same control or the same advantages.

However, we feel direct indexing misses the mark. It fails to articulate what’s truly valuable to many high-net-worth investors and their advisors when it comes to investing: being able not only to control passive mandates but also—crucially—to customize them. Parametric pioneered customized passive portfolios close to 30 years ago, and we continue to demonstrate their value to our clients today. Below you’ll find some of our recent thinking on the topic.

Latest insights and research

Investment advisory services offered through Parametric Portfolio Associates^® LLC ("Parametric"), an investment advisor registered with the US Securities and Exchange Commission (CRD #114310). Parametric is also registered as a portfolio manager with the securities regulatory authorities in certain provinces of Canada (National Registration Database No. 42850) with regard to specific products and strategies. Parametric provides advisory services directly to institutional investors and indirectly to individual investors through financial intermediaries. The information on this website does not constitute an offer to sell, or a solicitation of an offer to purchase, securities in any jurisdiction to any person to whom it is not lawful to make such an offer. Investing entails risks, and there can be no assurance that Parametric (and its affiliates) will achieve profits or avoid incurring losses. All investments are subject to potential loss of principal. Parametric does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Please refer to the disclosure page for important information about investments and risks.

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Direct Indexing

Latest insights and research

Direct Indexing: It’s All About Customization

Direct Indexing—Tax Alpha and Direct Beta

Lights, Camera, Action: Direct Indexing Takes Center Stage

Is Direct Indexing Coming for the ETF?

Choosing a Custom SMA Provider? What to Expect When You’re Investing.

What Is Direct Indexing? If It Sounds Familiar, That’s Because It Is.