Menu

Updated

What’s the difference between Direct Indexing and Advanced Indexing?

Direct Indexing uses individual stocks to track the movement of the broad US stock market instead of a single ETF. By doing so, it can take advantage of movements in individual stocks to harvest investment losses and may lower your tax bill. Direct Indexing is an enhanced form of our Tax-Loss Harvesting strategy.

Advanced Indexing also uses individual stocks to track the movement of the broad US stock market instead of a single ETF. However, rather than hold the individual securities solely in proportion to their market capitalization, the individual security are weighted across multiple factors to increase the expected after-tax return of the portfolio.

For more details, see the Advanced Indexing White Paper.

Was this article helpful?

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.