DIRECT INDEXING: GET MORE FROM YOUR CORE

Direct indexing strategies, which aim to provide broad equity market exposure by directly owning individual stocks, have proliferated in recent years. Their appeal is straightforward: like index funds, these strategies provide performance generally inline with a market index, such as the S&P 500. But rather than owning shares in a commingled vehicle such as an ETF or mutual fund, investors own a selection of the underlying securities that make up the index in a separately managed account (SMA). Unwrapping the index and owning securities directly unlocks opportunities to customize portfolios and align them to individual needs and preferences.

There are many reasons why investors may want personalized portfolios, including aligning investments with their social, environmental or personal values or reducing exposure to a particular stock or sector where the investor may have concentrated risk elsewhere in their investment portfolio. Refer to our GSAM Connect Article: A More Direct and Personal Way to Gain Index Exposure to learn more about the wide range of customization capabilities available through direct indexing. In this article, we’ll take a closer look at how investors who use a direct indexing strategy to get equity exposure can also achieve tailored tax management to potentially maximize overall portfolio growth.