Direct indexing fractional shares: which platforms hold real shares, which hold a subset, and which blend ETFs.
Four providers, three different products, one shared label. Every one of them publishes what your account will actually hold. Here they are side by side, quoted.
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In short
No US retail direct indexing provider claims to hold every stock in the index. Wealthfront S&P 500 Direct comes closest and says it attempts to hold all of them while conceding the real number is lower, roughly 200 to 300 names at $5,000 and more than 400 above $25,000, using whole and fractional shares. Frec says you buy "the majority" of the constituents across 25 indexes. Fidelity Managed FidFolios and Schwab Personalized Indexing both state in writing that they invest in a subset chosen to behave like the index. Only one product genuinely blends ETFs into the portfolio: Wealthfront US Direct Indexing, where individual stocks carry 50% of the weight between $100,000 and $500,000 and 85% above $500,000, with VXF, VOO or VB holding the rest. So the choice is not pure against blended. It is full replication against an optimized subset against a stock and ETF mix, and the fee ranges from 0.09% to 0.40% across all three.
Last updated September 2026
Direct indexing fractional shares compared
What each provider says it holds, in its own words
Column three is a quotation, not a summary. These sentences come from methodology whitepapers, Form ADV brochures and product pages, and they are the only reliable way to tell three different products apart when all three are marketed as direct indexing.
| Product | Architecture | What the provider says it holds | Position count | Fractional shares | Minimum | Annual fee |
|---|---|---|---|---|---|---|
| Wealthfront S&P 500 Direct | Attempted full replication | "We attempt to hold all stocks that comprise each index, but due to Tax-Loss Harvesting ... the actual number of stocks in the portfolio is likely to be less." | 200 to 300 stocks at $5,000; more than 400 above $25,000 | Whole shares, fractional shares, or both | $5,000 | 0.09% |
| Wealthfront US Direct Indexing | Stocks plus completion ETFs | "The individual stocks take up 50% of the original Total Stock Market ETF weight and the ETFs, VXF and VOO take up the remaining 50% of the weight." | Up to 100 stocks at $100k to $500k; up to about 600 above $500k | Yes, alongside VXF, VOO or VB | $100,000 | 0.25% |
| Frec Classic | Majority replication | "you're buying the majority of the individual stocks that make up that index." | Not published per strategy; 25 indexes offered | Yes. "Fractional shares are illiquid outside of Frec and not transferable." | $20,000 to $50,000 by strategy | 0.09% to 0.35% |
| Fidelity Managed FidFolios | Optimized subset | "it will invest in only a subset of the stocks that make up the index." | Not published. Five index strategies, three active | "Each Strategy can invest in fractional shares of individual securities." | $5,000 to be invested | 0.40% index, 0.70% active |
| Schwab Personalized Indexing | Optimized subset | "the investor owns a subset of individual securities that reflect the risk characteristics of a selected index." | Not published. Six index strategies | Not stated on the product page | $100,000 | 0.40%, 0.35% above $2m |
| A plain S&P 500 ETF | You own the fund, not the stocks | You hold shares of a pooled vehicle. Schwab: "An investor owns shares of the pooled investment, not the underlying securities." | One position | Depends on your broker, not the fund | One share | 0.03% to 0.09% |
Read row one and row two together, because they are both sold by Wealthfront and they are not the same purchase. S&P 500 Direct holds constituents and costs 0.09% from $5,000. US Direct Indexing holds stocks alongside completion ETFs and costs 0.25% from a $100,000 Automated Investing balance. People who say they used Wealthfront direct indexing and disliked the blending were almost always in the second product. If the blend is the objection, the fix is one product across, not one provider across.
Full replication vs optimized subset vs blended ETFs
Direct indexing is sold in three shapes under one name
The category name tells you the account owns individual stocks. It tells you nothing about how many, chosen how, or with what standing in for the rest. That is the part that decides your tracking error, your harvesting depth and your exit.
Attempted full replication
The account tries to hold every name in the index and only falls short because harvesting sold something and bought a correlated substitute. The shortfall is a by-product, not the design.
Who sells it
Wealthfront S&P 500 Direct, Wealthfront Nasdaq-100 Direct
The trade
Tracking is tightest and every constituent is a harvesting candidate. You need enough money for the tail of the index to be fundable, which is why a $5,000 account holds 200 to 300 names and a $25,000 account holds more than 400.
Optimized subset
A risk model picks a smaller basket chosen to behave like the index rather than to be the index. The manager is explicitly not trying to hold everything.
Who sells it
Fidelity Managed FidFolios, Schwab Personalized Indexing, most adviser-channel SMAs
The trade
Fewer positions to trade, and the optimizer can route around your excluded names cleanly. You get tracking error by construction, and names left out of the basket can never be harvested because you never owned them.
Stocks plus completion ETFs
Part of the portfolio is individual stocks and the rest is one or more ETFs standing in for the part of the market the stocks do not reach. This is the shape people mean when they say "blended".
Who sells it
Wealthfront US Direct Indexing
The trade
It gets broad-market exposure cheaply at balances where holding 3,000 names is impractical. The ETF slice cannot be harvested at the stock level, so at the $100,000 tier half the portfolio is doing ordinary fund-level harvesting.
Why does Wealthfront use blended ETFs for direct indexing
The blend is published, and it is bigger than most people assume
Wealthfront US Direct Indexing exists to replace VTI, the total US stock market. Reproducing that means owning several thousand names, most of them small, and at a $100,000 account the small end is not fundable at any sensible position size. So Wealthfront holds the large end directly and buys the small end as a fund. Its own methodology paper gives the split for both tiers:
| Account tier | Individual stocks held | Weight in individual stocks | Completion ETFs | Weight in ETFs |
|---|---|---|---|---|
| $100,000 to $500,000 | Up to 100 large and mid cap US stocks | 50% | VXF and VOO | 50% |
| Above $500,000 | Up to about 600 stocks from the CRSP US Large-Cap Index | 85% | VB | 15% |
The consequence is worth stating in plain numbers. At the $100,000 tier, half of the portfolio is a fund, and a fund can only be harvested when the whole fund is under water. That is the ordinary ETF-level harvesting every robo advisor already does, and it is the thing direct indexing is supposed to improve on. You are paying 0.25% and getting stock-level harvesting on half the money. At $500,000 the picture changes materially: 85% of the weight is in individual names and only the small-cap tail is a fund.
None of that makes the product bad. It makes it a different product from S&P 500 Direct, which holds constituents at 0.09% from $5,000 and does not blend anything. If your objection is the ETF sleeve, moving to the cheaper Wealthfront product solves it without leaving the platform. If your objection is that you only get the S&P 500 and the Nasdaq-100, that is a real limit and the answer is a provider with a wider menu. Our page on direct indexing fees across fourteen published rates sets the whole price range out, and the Wealthfront direct indexing fee and minimum page covers the three products individually.
The fine print on fractional shares
Three costs of fractional ownership, disclosed by the providers themselves
Fractional shares are what makes a $5,000 direct index possible at all. They also carry consequences that appear in the filings and almost nowhere else. Fidelity's Form ADV brochure for Managed FidFolios is the clearest disclosure in the category.
Some dividends never arrive
Fidelity discloses that amounts "that do not round up to $0.01 will not be distributed to the Program Account that held the fractional share." Below $1.00 per security the amount is retained, and above it, it is escheated to the state of Delaware. On a few hundred tiny positions this is small, and it is not zero.
You cannot vote a fraction
"Clients are not able to vote a fractional share of an individual security", although Fidelity will aggregate and vote them if you appoint Strategic Advisers as your proxy voting agent. If shareholder voting was one of your reasons for owning stocks directly rather than a fund, read that sentence twice.
Fractions cannot leave
"Fractional shares cannot be transferred to an account outside of Fidelity; in such situations, the fractional share would need to be sold and a taxable gain or loss incurred." Frec says the same of its own accounts. This is a universal ACATS constraint, not a provider policy, and it is the single most expensive surprise on the way out.
That third point deserves a sentence of arithmetic. A direct index built with fractional shares is mostly fractions by position count, so an ACATS transfer out moves your whole shares in kind with basis intact and liquidates the rest. In a portfolio that has been harvesting for years, the surviving positions are the winners, which means the fractions being sold are disproportionately the ones carrying gains. We covered the mechanics, the cost basis handling and what to do about it in ACATS transfer rules and why fractional shares get liquidated.
Best direct indexing platform by what you want held
Pick the architecture first, then the price
You want the S&P 500 and nothing else
Wealthfront S&P 500 Direct at 0.09% from $5,000 and Frec's S&P 500 strategy at 0.09% from $20,000 are priced identically, and both match SPY's own 0.09% expense ratio. Neither blends. The tiebreaker is the minimum and how much customization you want.
You want a benchmark other than the S&P 500
Frec licenses 25 indexes including the Russell 1000, 2000 and 3000 and the Morningstar US Total Market, from 0.13% to 0.35%. Fidelity offers five index strategies and Schwab six. Wealthfront offers two standalone products. We put the whole menu, with each strategy's published harvest rate, in direct indexing the Russell 3000 and the total US market.
You are replacing VTI
Total-market replication is where blending gets hard to avoid. Wealthfront blends explicitly and publishes the split. Frec's Morningstar US Total Market strategy is 0.13% from $50,000. Fidelity's U.S. Total Market Index Strategy is 0.40%. Compare what fraction of the weight is actually in stocks.
You care about exclusions
Frec publishes a hard cap: up to 25 stocks and up to 5 sectors, except on the S&P 500 Information Technology and MVIS Semiconductor 25 strategies. Fidelity publishes a five-stock, two-industry cap. Schwab says you can exclude stocks and industries without publishing a number.
You expect to move the account later
Every provider that uses fractional shares creates an exit cost you cannot avoid through ACATS. Ask before funding how many positions the strategy typically holds, because that number is a fair proxy for how much of your account is fractions.
You have no realized gains to offset
Then none of this matters yet. Stock-level harvesting only pays when there are gains for the losses to kill, and against ordinary income the deduction stops at $3,000 a year. Run it through the tax loss harvesting calculator before you pay for architecture.
Fractional shares and direct indexing questions
What people ask before they pick a provider
Why does Wealthfront use blended ETFs for direct indexing and who doesn't?
Only one of Wealthfront's three products blends. US Direct Indexing is trying to reproduce the whole US market, so at the $100,000 to $500,000 tier it holds up to 100 stocks for 50% of the weight and puts VXF and VOO in the other 50%, and above $500,000 it holds about 600 stocks for 85% of the weight with VB carrying 15%. S&P 500 Direct and Nasdaq-100 Direct do not blend: they hold the constituents. Frec does not blend either. Fidelity and Schwab do not blend, but they hold an optimized subset rather than the full index.
Which robo advisors use 100% fractional shares instead of blended ETFs for accounts under $100k?
Under $100,000 the blended option is not even available, because Wealthfront US Direct Indexing requires a $100,000 Automated Investing balance. What is available under $100,000 is Wealthfront S&P 500 Direct from $5,000 at 0.09%, Frec Classic from $20,000 at 0.09% for the S&P 500 strategy, and Fidelity Managed FidFolios once $5,000 is invested at 0.40%. Schwab Personalized Indexing starts at $100,000 and is out of reach. Betterment has no direct indexing product at all.
Do direct indexing platforms with fractional shares hold all 500 S&P 500 stocks?
No provider claims to. Wealthfront comes closest and states that portfolios of $5,000 may hold roughly 200 to 300 stocks while portfolios above $25,000 are likely to hold more than 400, and that it attempts to hold all of them but the actual number is likely to be less because harvesting keeps swapping names. Frec describes buying "the majority" of the constituents. Fidelity and Schwab both say in writing that they hold a subset.
What are Wealthfront's rules for selling fractional shares during an ACATS transfer?
Fractional shares cannot move through ACATS at all, at any broker, because the system settles whole shares. Fidelity states the general rule plainly in its own Form ADV brochure: "Fractional shares cannot be transferred to an account outside of Fidelity; in such situations, the fractional share would need to be sold and a taxable gain or loss incurred." Frec says the same thing about its own accounts. The whole shares move in kind with your basis intact and the fractions are liquidated, which is a taxable event on the fractions only.
Does Fidelity Managed FidFolios use fractional shares?
Yes. Its Form ADV brochure states that "Each Strategy can invest in fractional shares of individual securities" and gives three consequences most reviews never mention: dividends on a fractional position that do not round up to $0.01 are not distributed to you, you cannot vote a fractional share unless Strategic Advisers votes as your proxy agent and aggregates it, and the fractions cannot leave Fidelity.
Does Schwab Personalized Indexing use fractional shares?
Schwab does not state a fractional share policy on the Personalized Indexing product page. What it does state is the architecture: "the investor owns a subset of individual securities that reflect the risk characteristics of a selected index." Because the account is an optimized subset rather than a full replication, the fractional question matters less than it does at a provider trying to hold every name. The minimum is $100,000 and the fee is 0.40% on the first $2,000,000 and 0.35% above that.
Which direct indexing app offers Russell 3000 tracking with fractional shares instead of blending?
Frec licenses the Russell 3000 directly and charges 0.27% for it with a $50,000 minimum, against 0.20% for the IWV ETF. Fidelity's U.S. Total Market Index Strategy tracks the Fidelity U.S. Total Investable Market Index, described in its brochure as the largest 3,000 US companies, at 0.40%. Schwab has a US 3000 Broad Market strategy covering roughly 98% of US market capitalization at 0.40% from $100,000. Wealthfront has no Russell product: its broad-market answer is US Direct Indexing, which is the one that blends.
I have $50k and want pure direct indexing not blended ETFs. Should I use Frec or Wealthfront?
At $50,000 neither will blend, so pick on the index menu and the fee. Wealthfront S&P 500 Direct is 0.09% and holds more than 400 S&P 500 names at that balance. Frec is also 0.09% for its S&P 500 strategy and opens up 24 other benchmarks, including small-cap and Russell strategies, several of which cost 0.13% to 0.27%. If you want the S&P 500 and nothing else, the two are priced identically. If you want anything other than the S&P 500 or the Nasdaq-100, Wealthfront does not offer it.
Direct indexing fractional share index replication platforms: which ones actually replicate?
Ranked by how close each says it gets: Wealthfront S&P 500 Direct attempts full replication, Frec buys the majority of the constituents, and Fidelity and Schwab both build an optimized subset by design. None of the four claims to hold every name. If replication fidelity is what you are buying, read the provider's own wording rather than the marketing headline, because all four use the phrase "direct indexing" for three different things.
Is a subset worse than holding the whole index?
Not automatically, and the trade is real in both directions. A subset trades less, handles your exclusions more cleanly, and can be built to match the index on risk factors closely enough that the difference is small. But a name you never owned can never be harvested, so a subset gives the harvesting engine fewer independent positions to work with, and that is the entire reason people pay extra for direct indexing over an ETF. The narrower the basket, the more the fee has to be justified by something other than harvesting depth.
Sources
All figures and quotations retrieved September 8, 2026. Wealthfront S&P 500 Direct position counts, fractional share language, $5,000 minimum and 0.09% fee from the S&P 500 Direct and Nasdaq-100 Direct methodology whitepaper at research.wealthfront.com. Wealthfront US Direct Indexing tier construction, the 50% and 85% stock weights and the VXF, VOO and VB completion ETFs from the stock-level tax loss harvesting whitepaper at research.wealthfront.com. Fidelity Managed FidFolios strategy list, subset language, fractional share disclosures and the 0.40% and 0.70% gross advisory fees from the Fidelity Managed FidFolios Form ADV Part 2A brochure filed by Strategic Advisers LLC. Schwab Personalized Indexing subset language, six strategies, $100,000 minimum and the 0.40% and 0.35% fee tiers from schwab.com/personalized-indexing. Frec index count, per-strategy fees, minimums and the customization cap from frec.com/direct-indexing and frec.com/pricing; the "majority of the individual stocks" and fractional share transferability quotations from the Frec direct indexing handbook. The index-count comparison of 25 against 1 against 4 is Frec's own published chart, dated by Frec May 22, 2026, and is reported here as a competitor's claim. Provider terms change at every pricing update and every annual ADV amendment, so verify before you fund anything. Indexes is not affiliated with, endorsed by or sponsored by any provider named on this page. We are index construction and backtesting software: we do not manage money, place trades, custody assets or provide tax or investment advice.
Decide what should be in the index before you pay someone to hold it
Every provider on this page starts from a benchmark somebody else designed and then holds part of it. Build the membership and the weighting yourself first, exclude what you do not want to own, and test the construction against real market history, so the conversation about replication and basis points starts from a portfolio you actually chose.
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