Direct Indexing 1.0
Improve your portfolio's tax efficiency and reduce your portfolio's costs with Chicago Partner's Direct Indexing 1.0 investment strategy
Direct Indexing 1.0: Benefits to Investors
Eliminate Index & Mutual
Investors using a direct index strategy can harvest capital losses on the individual positions within an index, which are used to offset capital gains realized throughout the year.
Customized to Fit a
Portfolio's Investment Strategy
What is Direct Indexing?
Direct Indexing is the practice of holding shares or fractional shares in a similar proportion to an index.
By directly owning the shares (as opposed to owning shares of an ETF or Mutual Fund), the investor unlocks a range of benefits that gives them both greater customization and reduced expenses associated with third-party fund managers.
Below are some of the benefits an investor can expect from a direct indexing strategy:
- Eliminated fund expense fees
- The ability to tax-loss harvest
- Customization to their risk profile
Within the portfolio, direct indexes are carefully monitored to make sure they are maintaining the right allocation. When the direct index's allocation falls outside the bounds of the target allocation, an investor or advisor rebalances the direct index to keep it on target.
Used correctly, direct indexes can be a strong investment strategy to add to a portfolio.
How Direct Indexing 1.0 Works
At Chicago Partners, our first level of Direct Indexing strategies is Direct Indexing 1.0 (D.I. 1.0).
As the first quadrant in our 4-Quadrant Equity Approach, D.I. 1.0 focuses on index replication to bypass the fund management fees charged by fund managers.
To the investor, this strategy helps the overall portfolio by reducing the downward effect fees have on performance.
Our team has a dedicated subset of advisors specialized in creating, managing, and monitoring direct indexes for clients.