Direct Indexings Key Advantage

For Vettafis ETFTrends, James Comtois shares his thoughts on the major differentiator for direct indexing vs the traditional strategy of investing in index funds. Over the last couple of decades, its become accepted wisdom that investing in passive funds is the best path to retirement given their diversification, history of long-term gains, and low costs and fees.

However, there is one drawback to this strategy. Investors are unable to capitalize on tax losses to offset gains to lower their year-end tax bill. Direct indexing addresses this weakness while still retaining the major benefits of passive index investing. In addition, it also enables investors to customize their holdings to reflect their personal values and beliefs.