Is Direct Indexing Right for You?

By Kevin Maeda

DIRECT INDEXING: Is Direct Indexing Right for You?

See how direct indexing compares to index funds and ETFs for investors who want to customize their accounts or minimize investment-related taxes.

Kevin Maeda, Chief Investment Officer of Direct Indexing at Natixis Investment Managers Solutions, examines the differences between index funds, ETFs and direct index separately managed accounts.
  • In a direct index account, investors own the underlying stock positions directly, providing greater opportunities for tax-efficiency and customization.
  • For assets in taxable accounts, direct indexing can offer substantially better after-tax returns than index funds or ETFs, particularly for investors in the highest tax brackets.
  • Direct index accounts can provide an effective solution for investors with large, low-cost positions in a single stock who want to diversify their holdings but minimize capital gain taxes.
  • Accounts can also be customized, excluding specific companies or industries or tilting toward companies with desired characteristics, such as dividend yield or value.

Tax-Efficient Investing in Separately Managed Accounts (SMAs)

Direct Indexing SMAs can help address key issues facing tax-sensitive investors. All accounts are actively managed to optimize tax loss harvesting while providing beta exposure to an index. Our tax-managed SMAs include:

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

Diversification does not guarantee a profit or protect against a loss.

All investing involves risk, including the risk of loss.

The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary

Natixis Advisors, LLC does not provide tax advice. Please consult with your financial advisor or tax professional.

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