Despite strong growth projections and interest from advisors, direct indexing has yet to break through with RIAs, according to a survey from FTSE Russell.
79% of advisors who responded to the survey admitted they have yet to use direct indexing in their own practices. Advisors are keen to take advantage of the investment strategy, though, with 48% of respondents saying they plan to begin using direct indexing in the next one to five years.
Direct indexing is an investment approach that seeks to replicate the performance of an index by purchasing the underlying shares of that index. A 2022 report from Cerulli identified tax-loss harvesting, increased flexibility — for example, advisors can adjust direct indices to meet value-based investing needs — and the ability to efficiently unwind concentrated positions as benefits of direct indexing.
