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Direct Indexing

Posted: Sun Jan 15, 2023 6:42 pm
by ppnewbie
I heard a very interesting comment by Burton Malkiel. With direct indexing they can buy a select group of stocks that tracks the index but if a stock is down the direct indexer can sell it and buy another stock similar to tax loss harvest.

Re: Direct Indexing

Posted: Thu Jan 26, 2023 11:50 am
by ppbob
Schwab has a version of this. The expense ratio 0.4% is too high for me but it has interesting features. They design portfolios to track four different broad market indexes. They allow you to do tax loss harvesting.

I think there would also be problems with income tax reporting, but if you download the 1099 into a tax program, it would be your computer talking to the IRS computer. I would hate for it to bring one of the 87,000 new IRS agents on my case.

https://www.schwab.com/direct-indexing

Re: Direct Indexing

Posted: Thu Jan 26, 2023 3:10 pm
by welderwannabe
Im also not sure theyve figure out the transfer process from one brokerage to another.

The stocks would transfer fine, sure, but its just gonna look like a pile of stocks to the receiving broker. Direct indexing is really a method to keep you from being able to churn out to another broker, or at least thats my fear.

I'll stick with mutual funds for now. You can always break that up into S&P + Extended market to do some TLH without the complexity of holding 500 stocks.