Instead of buying a traditional index fund or ETF, direct indexing allows investors to own many of the individual stocks that make up an index. This can provide more control and flexibility.
The potential advantages are appealing. Direct indexing may create opportunities for tax-loss harvesting, allow investors to exclude certain companies or industries, and help manage concentrated stock exposure. For investors with larger taxable portfolios, these features can be especially valuable.
But there are trade-offs. Direct indexing can be more complex than owning a fund, may require ongoing management, and can result in performance that differs from the index. It may also come with higher costs or minimum investment requirements.
The key question is not whether direct indexing is “better,” but whether it fits your personal financial picture.
At Kerr Wealth Advisors, we help clients evaluate strategies like direct indexing in the context of their full plan. Contact us to discuss whether this approach may be appropriate for your goals.
H. Brad Kerr IV, Vice President/ Wealth Management, Financial Advisor
215.619.3926/ bkerr4@janney.com
1767 Sentry Parkway West Suite 110 Blue Bell, PA 19422
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