No. of Recommendations: 1
What is direct indexing?
Personalized portfolios that can help boost after-tax returns for clients
"Unlike bundled products such as mutual funds or ETFs, personalized indexing allows investors to harvest losses at the security level. Here’s how it works: Stocks that drop below their cost basis are sold, and correlated (but not "substantially identical") replacement stocks are immediately repurchased to navigate the wash-sale rule...
[chart of Average 10-year TLH alpha by harvest frequency for High-net-worth investor: 0.34% annually, 1.03% quarterly]
One problem that can arise with systematically harvesting tax losses is that, eventually, you will have sold all the losing stocks in the portfolio. Because of the potential capital gains that would result from selling those low-cost-basis stocks, switching to another investing strategy could be costly. For this reason, tax-loss harvesting in a personalized index is more effective when there is regular cash flow (to purchase new securities)"
https://advisors.vanguard.com/investments/personal... 