Vise, which uses artificial intelligence to help advisors build and manage portfolios down to the individual stock, raised a $14.5 million Series A round of funding led by Sequoia Capital. Goldman Sachs acquired Folio Financial, a self-clearing broker-dealer and technology company. Schwab bought the remains of Motif, the portfolio management company that suddenly ceased operations. Since then, more companies have also begun offering fractional shares or, it seems, sought to catch up to others that were.Īltruist, a new commission-free custodian to RIAs, launched and began offering fractional shares. Now you can do it all at scale,” an executive told Cerulli Associates. Direct indexing used to be for someone with an account worth at least a half a million bucks. “The collapse in trading fees has made a difference. Shares of TD Ameritrade, which it acquired shortly after, and other competitors tumbled on the news. Last fall, Charles Schwab disrupted part of the financial services industry when it eliminated commissions to trade stocks, ETFs, and options for retail investors and the more than 7,500 RIAs that custody with the firm. Offering direct indexing to affluent and mass-affluent investors could be a boom for any company that does it. Historically, SMAs have only been for the wealthiest private investors and institutions with portfolios big enough to justify the costs.īut investors crave alpha and customized portfolios as much as ever, and changes over the last year to the costs, flexibility and sophistication of trading, made direct indexing a renewed subject of interest in 2020. Investment managers have long been forgoing index mutual funds and exchange-traded funds in favor of separately managed accounts, allowing them to pick and choose stocks to boost returns, lower taxes, or customize an equity allocation to a client’s liking. A new report just threw cold water on a hot topic in investment management this year: direct indexing.ĭirect indexing was not new in 2020.
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