Direct indexing: build, backtest and track your own direct index.
Own the stocks instead of the fund, and you can tune the weights, drop the companies you do not want, and harvest losses. Design that index here first: weight stocks and crypto, backtest it on real market history, and track it against the S&P 500 before you commit a dollar.
Educational only · Never places a trade
In short
Direct indexing means buying the individual stocks in an index instead of a single fund that holds them. Because you own each stock, you can harvest tax losses on the losers, exclude companies you object to, and tilt the weights. It costs 0.09% to 0.40% a year at the major providers, against roughly 0.03% for an S&P 500 ETF, and minimums run from $5,000 to $100,000. It pays off mainly in a large taxable account with gains to offset, and does very little inside an IRA.
Last updated July 2026
What it costs
Direct indexing minimums and fees compared
Every figure below comes from the provider's own published pricing as of July 2026. Fees are annual and charged on assets under management. Verify with the vendor before you move money.
| Provider | Minimum | Annual fee | Notes |
|---|---|---|---|
| Fidelity Managed FidFolios | $5,000 | 0.40% a year (index strategies) | Lowest minimum at a major brokerage |
| Wealthfront S&P 500 Direct | $5,000 | 0.09% a year | Tracks the S&P 500, not an index you design |
| Frec | $20,000 to $50,000 | 0.09% to 0.35% a year | Direct indexing specialist, equities only |
| Wealthfront US Direct Indexing | $100,000 | 0.25% a year (advisory fee) | Included in Automated Investing |
| Schwab Personalized Indexing | $100,000 | From 0.40% a year | Separately managed account with screens |
| A plain S&P 500 ETF | Price of 1 share | 0.03% to 0.10% a year | No tax-loss harvesting, no customization |
The pattern is clear once the numbers sit next to each other. You are paying somewhere between 0.06% and 0.37% a year more than a plain index fund, and in exchange you get tax-loss harvesting and control over what you hold. On a $250,000 taxable account, the fee gap at 0.40% versus a 0.03% ETF is about $925 a year. Harvested losses in a normal year tend to run 1% to 2% of the portfolio, which at a 23.8% combined federal rate on long-term gains is worth roughly $595 to $1,190. That is why direct indexing is a close call for many people and an obvious win for a few.
Read the full breakdown in how much direct indexing costs, or work through the decision in is direct indexing worth it. The harvest side of that math, including the wash-sale rules that quietly delete it, is covered in direct indexing tax loss harvesting, and if you would rather skip the fee entirely, doing direct indexing yourself is a realistic option under about $250,000.
Where Indexes fits
Decide what the index should hold before you fund anything
Indexes is not a brokerage. It does not hold your money, place trades, or harvest tax losses, and it never will. What it does is the part every direct-indexing provider skips: letting you author the index, see how it would have behaved, and change your mind cheaply. Once you know the rules you want, you can implement them anywhere, at Fidelity, at Schwab, or by buying the stocks yourself.
Author the rules, not just the tilts
Managed programs let you exclude a sector or nudge a factor. Here you set the universe, the weighting scheme, and the rebalance cadence yourself, then name the thing and keep it.
See the drawdown before you live through it
Backtest the index against real market history and read the returns, volatility and worst drawdown. Hypothetical, and past results never predict the future, but it beats guessing.
Stocks and crypto in one index
Every managed direct-indexing product on the market is US equities only. If your thesis spans both, you need a tool that can weight a token next to a stock and benchmark the result against BTC.
No minimum, because there is no account
Nothing to fund and nothing to move. A flat software fee instead of a slice of your assets, which means the cost does not grow just because your portfolio did.
How it works
From a thesis to a tracked index in four steps
Pick the universe
Choose the stocks and crypto tokens the index should hold. Copy a well-known index and edit it, or start from your own list.
Choose the weights
Market cap, equal weight, or weights you set by hand. The weighting scheme drives most of the difference in outcome.
Backtest it
Run the index against real market history and read the return, the volatility and the worst drawdown it would have put you through.
Track it
Keep the index live and watch it against the S&P 500, the Nasdaq 100 or BTC as the market moves.
Be honest with yourself
Who direct indexing actually suits
It probably makes sense if
- You hold a large taxable account, generally six figures or more, outside a retirement wrapper.
- You realize capital gains often enough that harvested losses have something to offset.
- You want to exclude specific companies or sectors, or hold a concentrated position you are slowly unwinding.
- You have a real view on weights and want the index to express it rather than a cap-weighted default.
It probably does not if
- Most of your money sits in an IRA or 401(k), where there are no annual gains to offset.
- Your balance is small enough that a 0.40% fee outweighs whatever losses you could harvest.
- You want simplicity at tax time. Direct indexing multiplies your tax lots.
- You would be tempted to tinker. A cheap index fund you leave alone beats a custom index you keep second-guessing.
Indexes is educational and informational software, not investment advice. Nothing here is a recommendation to buy or sell anything, and a backtest is a hypothetical result, not a promise.
Questions
Direct indexing, answered
What is direct indexing?
Direct indexing means buying the individual stocks that make up an index instead of buying one fund that holds them. You end up with roughly the same exposure as the index, but because you own each stock directly you can sell individual losers to harvest tax losses, exclude companies you do not want, and tilt the weights toward what you believe in.
How much does direct indexing cost?
Managed direct indexing generally costs 0.09% to 0.40% of your assets per year. Fidelity Managed FidFolios and Schwab Personalized Indexing charge 0.40%, Wealthfront charges 0.25% on Automated Investing, and Frec starts at 0.09%. A plain S&P 500 ETF costs about 0.03%, so direct indexing usually adds roughly 0.06% to 0.37% a year in fees.
What is the minimum for direct indexing?
Minimums range from $5,000 to $100,000 at the major providers. Fidelity Managed FidFolios and Wealthfront S&P 500 Direct start at $5,000, Frec starts at $20,000, and both Schwab Personalized Indexing and Wealthfront US Direct Indexing require $100,000. Traditional separately managed accounts often start at $250,000 or more.
Is direct indexing worth it?
Direct indexing is worth it mainly if you hold a large taxable account and have capital gains to offset. The benefit comes from harvested tax losses, which typically run 1% to 2% of the portfolio a year in normal markets. If the tax value of those losses beats the extra fee you pay, it pays for itself. In an IRA or 401(k), where losses cannot be harvested, it almost never makes sense.
Direct indexing vs ETF: which is better?
An ETF is simpler and cheaper, and for most people in a retirement account it wins outright. Direct indexing is better when you want three things an ETF cannot give you: tax-loss harvesting at the individual stock level, the ability to exclude companies or sectors, and custom weights. You pay for that flexibility with a higher fee and a more complex tax return.
What are the disadvantages of direct indexing?
It costs more than an index fund, it creates far more tax lots and paperwork, and it can leave you with a portfolio that is awkward to unwind because selling appreciated positions triggers gains. Tracking error is also real: your basket will drift from the index it copies. The tax benefit fades over time as fewer positions sit at a loss.
Can you do direct indexing yourself?
Yes, and plenty of people do. You choose the index you want to copy, decide the weighting rules, buy the underlying stocks at a broker that supports fractional shares, and rebalance on a schedule. The hard parts are designing the rules and knowing whether they would have held up, which is exactly what an index builder and backtester is for. You do the tax-loss harvesting manually.
Does direct indexing work in an IRA?
Technically yes, but the main reason to do it disappears. Gains and losses inside an IRA or 401(k) have no annual tax consequence, so there is nothing to harvest. If you want direct indexing for the customization rather than the tax break, it still works, but you are paying a higher fee for something an index fund does for less.
Go deeper
Design the index before you fund it
Bundle stocks or crypto into your own weighted index, backtest it against real market history, and track it against the S&P 500 or BTC. No account, no minimum, no trades. Educational and informational only.