How Much Does Direct Indexing Cost? Fees and Minimums Compared

Direct indexing costs 0.09% to 0.40% of your assets per year at the major US providers, compared with roughly 0.03% for a plain S&P 500 ETF. Minimums run from $5,000 at Fidelity Managed FidFolios up to $100,000 at Schwab Personalized Indexing and Wealthfront US Direct Indexing. The practical question is not the headline fee but the gap: you are paying somewhere between 0.06% and 0.37% a year more than an index fund, and the harvested tax losses have to be worth more than that gap for the strategy to pay for itself.

Below are the published numbers as of July 2026, what they mean in dollars, and the costs that never show up on a pricing page. This is educational content, not investment or tax advice.

Direct indexing fees and minimums, compared

Every figure here comes from the provider's own pricing or disclosure documents. Providers change their pricing, so confirm before you move money.

Two things jump out. The first is that the entry point has collapsed. Direct indexing used to be a $250,000 product sold through advisors, and Fidelity now opens it at $5,000. The second is that the cheap options are cheap for a reason: Wealthfront's 0.09% S&P 500 Direct account tracks the S&P 500 as published rather than an index you design. You are paying for tax-loss harvesting, not for authorship.

What that costs in actual dollars

Percentages hide the decision. Here is the same fee schedule translated into a yearly bill, using a 0.03% ETF as the baseline.

Now put the benefit next to it. In a normal market, a direct-indexed portfolio tends to surface harvestable losses worth about 1% to 2% of the portfolio each year, because individual stocks fall even in years when the index rises. Those losses offset realized capital gains. At a 23.8% combined federal rate on long-term gains, which is the 20% top rate plus the 3.8% net investment income tax, a 1.5% harvest on $250,000 is $3,750 of losses worth roughly $893 in deferred tax.

Against a $925 fee premium, that is a wash. On a $1,000,000 account the same math produces roughly $3,570 of tax value against $3,700 of extra fees, which is also close to a wash at the 0.40% tier. Move to a 0.09% provider and the fee premium drops to about $600 on that million-dollar account, and the strategy clears its cost comfortably. The provider you pick matters as much as the strategy.

The costs nobody puts on the pricing page

The advisory fee is the visible cost. Three others are real and routinely ignored.

• Tax lot sprawl. Instead of one position you now hold a few hundred, each with its own cost basis and holding period. Your 1099-B gets long. If you use a tax preparer who bills by complexity, this shows up as a bill.
• The unwind problem. After a few good years, most of your positions carry embedded gains. Selling the portfolio to leave the strategy means realizing them. Direct indexing is easy to enter and expensive to exit, which is the opposite of an ETF.
• Harvest decay. The tax benefit is front-loaded. In year one almost everything is near its purchase price and losses are easy to find. By year five, most positions are up, and there is far less to harvest. Any model that assumes a steady 1.5% harvest forever is flattering the strategy.

Tracking error belongs on the list too. A direct-indexed basket that has been screened and harvested will not match its benchmark exactly. That drift can go your way or against you, and over a decade it can easily swamp the fee difference in either direction.

How much does direct indexing cost compared with an ETF?

An S&P 500 ETF costs about 0.03% a year, so direct indexing typically costs 3 to 13 times more in fees. That sounds damning until you remember the ETF cannot harvest a loss on a single holding, because you own the wrapper rather than the stocks. The right comparison is not fee versus fee, it is fee premium versus tax value, and that calculation is personal: it depends on your gains, your bracket, your state, and how long you plan to hold.

Is there a cheaper way to do it?

Yes, and it is the option most articles skip: do the index design yourself and implement it at a broker with fractional shares and no advisory fee. You choose the universe, set the weights, buy the positions, and handle your own harvesting. You give up the automation and take on the work, and you pay no percentage of assets to anyone.

The hard part is not the buying. It is knowing what to buy and whether the rules you invented would have held up. That is a research and modeling problem, and it splits cleanly into two jobs. Deciding what belongs in the basket in the first place means digging into the companies, and it helps to pull the fundamentals on a ticker into one structured view rather than pinballing between filings. Deciding how to weight and rebalance them is the index question, and it is what a custom index builder and a backtest against real market history are for. Design the rules, see the drawdown they would have handed you, then decide whether you want to own that basket at all.

Worth being blunt about the limits: modeling an index is not the same as owning one. A tool like this does not place trades, does not custody assets, and does not harvest losses for you. It tells you what the index would have done. The harvesting still has to happen in a real account, whether a provider does it or you do.

The short version

Direct indexing runs 0.09% to 0.40% a year with minimums from $5,000 to $100,000. The fee premium over a plain index fund is roughly 0.06% to 0.37%, and harvested losses of 1% to 2% a year are usually worth enough to cover that premium only in a sizable taxable account with real gains to offset. Inside an IRA, where there is nothing to harvest, you are paying extra for nothing. If the numbers are close for you, they probably are not close enough.

Next: work through the decision in is direct indexing worth it, compare the providers on our direct indexing overview, or see the specific tradeoffs at Fidelity, Schwab and Wealthfront.