Customized Index Strategy Could Hit $825 Billion in Four Years

December 20th, 2022, 1:27 PM

Cerulli Associates expects assets in direct indexing to climb to $825 billion by 2026 from roughly $462 billion today, according to a research paper sponsored by direct-indexing provider Parametric Portfolio Associates. 

Direct indexing allows investors to select which stocks to buy in a benchmark index instead of owing a fund that tracks a specific gauge like the S&P 500. Direct indexing gives advisors the ability to tailor portfolios, sometimes at lower cost, which has become increasingly important as asset management firms vie for clients' dollars, according to AdvisorHub.

Direct indexing once was hailed as an exchange-traded fund (ETF) killer that would revolutionize investing. However, the strategy has yet to live up to its name. Bloomberg Intelligence senior ETF analyst Eric Balchunas has written that "direct indexing could find some niche uses, but we do not think it will surpass 2-3 percent market share" given that it is more complex, active and expensive than ETFs.

Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.

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Blog

Customized Index Strategy Could Hit $825 Billion in Four Years

December 20th, 2022, 1:27 PM

Cerulli Associates expects assets in direct indexing to climb to $825 billion by 2026 from roughly $462 billion today, according to a research paper sponsored by direct-indexing provider Parametric Portfolio Associates. 

Direct indexing allows investors to select which stocks to buy in a benchmark index instead of owing a fund that tracks a specific gauge like the S&P 500. Direct indexing gives advisors the ability to tailor portfolios, sometimes at lower cost, which has become increasingly important as asset management firms vie for clients' dollars, according to AdvisorHub.

Direct indexing once was hailed as an exchange-traded fund (ETF) killer that would revolutionize investing. However, the strategy has yet to live up to its name. Bloomberg Intelligence senior ETF analyst Eric Balchunas has written that "direct indexing could find some niche uses, but we do not think it will surpass 2-3 percent market share" given that it is more complex, active and expensive than ETFs.

Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.

Return to All