Avita Sukhram, Director, Equity Index Product Wealth, FTSE Russell discusses how advisors can make the most of direct indexing, better serve clients, and differentiate their practice.
Direct Indexing, typically accessed through an index SMA, allows advisors to deliver customizable, tax-efficient solutions for their clients. Once reserved for a select few institutions, investment managers, and ultra high net-worth clients, the technology behind direct indexing has come a long way in the last few years, making it much more accessible and readily used by asset managers and advisors alike.
Direct indexing involves buying the components of an index in the same proportional weights as a chosen index. The combination of the chosen index with the clients’ needs creates a completely personalized portfolio. Direct indexing gives an investor greater autonomy, control, and tax advantages than buying an index mutual fund or index exchange-traded fund (index ETF).
Avita encourages advisors to start with a deep understanding of the underlying index. Looking under the hood to make sure the index methodologies are aligned with the strategy’s objectives and the end client’s investment goals is critical. Sukhram calls this approach, “Passive investing with active consideration.”
FTSE Russell prioritizes delivering high quality data and indexes to clients. As the index landscape continues to evolve, FTSE expands its services to meet these growing needs to accommodate investment allocations. Now investors have more choice than ever in approaching passive investing.
For more market insights from FTSE Russell, Join Blackrock and FTSE Russell as they review Q2 equity markets
Topics include:
- Widespread Pain: Stubbornly high inflation, aggressive Fed rate hikes and growing recession fears … what moved the markets in Q2?
- Looking for Shelter: Few sectors escaped the sell-off, but defensive stocks such as health care and staples fared better than most. Which ones and why?
- Value vs Growth: How did the value fare in Q2?
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FTSE Russell, a subsidiary of the London Stock Exchange Group (LSEG), is a global provider of benchmarks, analytics, and data solutions. FTSE Russell’s solutions offer methodologically driven insights into global markets across all asset classes and strategies.
FTSE offers indexes in eight categories, including equity, alternatively weighted, real estate, sustainable investment, fixed income, infrastructure, factors, and multi-asset. As of December 31, 2020, $17.9 trillion was benchmarked to FTSE Russell’s indexes. FTSE Russell has been helping investors, asset owners, and investment banks make better informed investment decisions for over thirty years.