Direct indexing gains appeal as taxable losses mount
duda • June 20, 2022
Investment News – June 20, 2022
This Investment News article weighed the pros and cons of direct indexing, a strategy that uses individual stocks instead of ETFs and funds as the building blocks of an indexing strategy. The article states “David Schneider, founder of Schneider Wealth Strategies, is also a fan of direct indexing for tax optimization purposes, but he said advisers and clients need to be weighing the added fees.”
Mr. Schneider explains that “Direct indexing offers more potential tax-loss harvesting opportunities than a conventional ETF or fund approach, although these benefits are probably overstated,” and that with direct indexing, “There’s a high degree of customization, so it can be a good strategy for investors who want to avoid exposure to specific companies or industries. But one of the downsides to direct indexing is potentially higher costs versus an ETF or index fund.”
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