What Is Direct Indexing
Direct Indexing allows investors to own individual stocks that replicate a broad index—like the S&P 500—rather than investing in a mutual fund or ETF. This allows greater customization, tax efficiency, and control over portfolios.
Why It Matters
Direct Indexing unlocks a level of precision and personalization that pooled vehicles can't match. It's especially valuable for high-income investors looking to:
- Harvest Tax Losses More Frequently
- Exclude Individual Stocks (ex: concentrated positions or ESG screens)
- Reflect Personal Values or Goals
- Maintain Index-Like Exposure while optimizing for after-tax returns
The Zoe Advantage
- Daily Tax Loss Harvesting: we scan portfolios daily to capture tax savings opportunities.
- Low Tracking Error: stay closely aligned with your benchmark index.
- Automated & Efficient: no manual oversight required from advisors
- Seamless Integration: built directly into our trading and rebalancing system
Rebalancing and Tax Loss Harvesting Alpha = Real Value
Leading research shows that Direct Indexing can generate ~136 bps in annual after-tax alpha, especially for high-income investors in taxable accounts. Zoe helps advisors unlock that value, without lifting a finger.
What Advisors Gain
- Tangible Value to Clients: help clients keep more of what they earn through tax optimization.
- Differentiation: offer institutional-grade capabilities without building in-house infrastructure.
- Automation: save time while delivering personalization at scale.
Zoe's Direct Indexing is Ideal For
- Tax-sensitive clients in non-qualified accounts.
- Investors with concentrated stock exposure.
- Socially responsible investors.
- Having a long-term investment focus.