Direct Indexing: Personalized Investments in 2025 | Index One
Happy New Year!
In this edition of Index One Insights by Index One , we reflect on the growth of direct indexing and some direct indexing strategies to consider in 2025.
Also in this edition:
?? POLL: Which trend are you most excited about for 2025?
?? Index One wins 'Best Index Data Provider'
?? i1 NUTS
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Direct Indexing: Personalized Investments in 2025 | Index One
Direct indexing continues to transform the investment landscape by offering a highly personalized approach in investing. Direct indexing allows investors to own individual securities within an index rather than buying a fund that tracks it, allowing investors to tailor portfolios to their specific needs, preferences, and goals.
What is Direct Indexing?
Direct indexing involves replicating an index's performance by directly purchasing its individual stocks. This strategy has gained popularity for its flexibility, tax efficiency, and customization. As the number of direct indexing tools and platforms continues to rise, investors can access market indices while benefiting from personalized strategies that traditional ETFs cannot offer.
Growth of Direct Indexing
According to Ryan Sullivan, Director, Head of Buy Side at FTSE Russell, although only 21% of US advisors currently use direct indexing, 48% plan to adopt it within the next 1-5 years, signaling significant future growth.
Benefit of Direct Indexing: Tax Efficiency
A key advantage of direct indexing lies in its tax efficiency through tax-loss harvesting.
By selling individual stocks that have decreased in value and replacing them with similar securities (adhering to wash sale rules), investors can realize losses to offset taxable gains while preserving overall market exposure.
This approach is particularly beneficial in volatile markets, where losses can be strategically harvested to maximize tax advantages.
Direct Indexing Technology
Advances in technology have played a pivotal role in the rise of direct indexing. Platforms like Index One equips advisors with flexible indexing tools, providing clients with direct indexing strategies that work for them. The rise of robo-advisors and cloud-based solutions has further expanded access to direct indexing tools and strategies, making it an appealing option for a wider range of investors.
Index One calculates a number of direct indexing strategies for money managers:
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Direct Indexing in 2025
As we enter 2025, direct indexing is poised to sustain its rapid growth, offering a wider range of personalized investments and tax-efficient strategies.
We are looking forward to seeing new and innovative approaches to direct indexing this year.
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POLL: Which trend are you most excited about for 2025?
2025 is poised to introduce several exciting ETF trends, driven by global economic shifts and changing consumer and environmental needs.
Which trend are you most excited about for 2025?
Data Management Insight Awards Europe 2024: Index One wins 'Best Index Data Provider'
We are thrilled to announce that Index One has been awarded 'Best Index Data Provider' at the Data Management Insight Awards Europe 2024!
We are deeply grateful for the unwavering support from our clients, partners, friends, and followers, which enables us to continue democratizing the indexing space.
Through accessible tools such as index backtesting, live index calculation, delivery, and reporting, we aim to make indexing more innovative and inclusive.
Looking ahead, we’re excited to collaborate with our clients and prospects by providing modular, cloud-based indexing tools and premier client service to help you utilize, build, or own indices seamlessly.
Thank you for being a part of our journey!
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i1 NUTS
Waverton coined the acronym NUTS that comprises of Nat Ned, UPM, Technip Energies and Siemens. This index is market-cap weighted.
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