Why financial institutions are gobbling up direct indexing technology

Meanwhile, the rise of fractional share investing and zero-commission trading are making the strategy accessible to more than just ultra-wealthy investors, says Awaad Aamir, a securities and investments analyst at research firm Celent.

“It’s part of this trend around democratizing services that were exclusively only available to high net worth individuals who used to forge their own ETFs and index mutual funds for tax purposes,” Aamir says in an email. “Mass-affluent clients present a significant opportunity for online brokerages, and direct indexing is one way to appeal to them since they have a greater interest in personalized portfolios and taking advantage of tax-loss harvesting than mass market [consumers].”