Directing indexing has the potential to be the next big disruptive force in the financial industry.
“Direct indexing product is a separately managed account that has as its benchmark a commonly followed equity index. But because it’s a separately managed account, it can be customized – you own the individual securities, you can do tax management, ESG, responsible investing and other things,” Brian Langstraat, CEO, Parametric, said at the Inside ETFs conference.
Basically, an investor would own a portfolio of individual securities that replicates a benchmark index, as opposed to indirectly investing in these securities through a fund product. This may provide benefits such as tax-loss harvesting on individual securities.
More investors look for greater customization to access the markets on their own terms, and many are looking into developments for direct indexing as a viable option, especially with many brokerage platforms now offering commission-free trades.
At Parametrics, they have heavily invested in the technology necessary, allowing them to scale in a way to meet the increased demand.
“Parametric partners with advisors, institutions, and consultants to build portfolios focused on what’s important to them and their clients. A leader in custom solutions, we help investors access efficient market exposures, solve implementation challenges, and design portfolios that respond to their evolving needs. We also offer systematic alpha and alternative strategies to complement clients’ core holdings,” according to Parametric.
Watch Brian Langstraat Discuss Direct Indexing:
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