Frec direct indexing: fees, minimums and a Frec investing review.
All 25 strategies with what each one costs, what it requires and how much it has actually harvested, taken from Frec's own published table. Then a tool for testing the construction yourself.
Educational only · Never places a trade
In short
Frec is a self-directed US direct indexing platform: you own the individual stocks that approximate an index, and Frec harvests losses at the holding level. Its Classic product costs 0.09% to 0.35% a year across 25 indices, with a minimum of $20,000 on most strategies and $50,000 on the small cap, total market, Russell and EAFE ones. The 0.09% everyone quotes is the S&P 500 strategy alone. Two things the reviews miss: Frec matches or undercuts the comparable ETF on only 6 of its 25 strategies, and its published historical harvest rate swings from 16% to 55% depending on which index you choose, so the cheapest Frec strategy and the highest-harvesting one are not the same product.
Last updated August 2026
Frec direct indexing fees
What Frec costs, and why the 0.09% number is misleading on its own
Frec sells three different things at three very different prices. Almost every article about Frec is describing only the first one, and only its cheapest strategy.
| Product | Minimum | Annual fee | What it is | Frec's harvesting claim |
|---|---|---|---|---|
| Classic | $20,000 to $50,000 | 0.09% to 0.35% | Plain direct indexing across 25 indices. This is the product almost everyone means when they say "Frec". | Harvest up to 40% of your portfolio in losses |
| Long short | $100,000 to $500,000 | 0.50% to 1.30%, plus 0.23% to 0.86% financing | A leveraged long-short overlay with a factor tilt. A different risk profile entirely, not a cheaper index fund. | Harvest up to 337% of your portfolio in losses |
| Diversify | $100,000 to $500,000 | 0.60% to 1.10%, plus 0.23% to 0.57% financing | For unwinding a concentrated single-stock position over time with limited tax impact. Competes with exchange funds, not with ETFs. | Reduce concentration risk on day one |
Read the two lower rows carefully before you compare Frec to anything. Long Short and Diversify carry financing costs on top of the management fee, so a Diversify account can run past 1.6% all in. Those are leveraged and concentration-unwind products with a different risk profile, and quoting Frec as "a 0.09% platform" while pointing at them is how people end up surprised. The rest of this page is about Classic, which is what almost everyone means.
Frec also sells a portfolio line of credit against your holdings, letting you borrow up to 70% of portfolio value, quoted at 4.64% when we checked. That is worth knowing for two reasons: it is a genuine feature if you want liquidity without selling and realizing gains, and it is part of the answer to how a 0.09% platform pays its bills.
All 25 Frec indices
Every Frec Classic strategy, its minimum, its fee and what it has harvested
Frec publishes each strategy next to the ETF it is meant to replace and that ETF's expense ratio, which is unusually transparent. Here is the whole table in one place, sorted by fee, with the comparison Frec leaves to you.
| Strategy | Benchmark ETF | Minimum | Frec fee | ETF expense ratio | Historical harvest rate |
|---|---|---|---|---|---|
| S&P 500 | SPY | $20k | 0.09% | 0.09% | 25% |
| CRSP US Large Cap | VV | $20k | 0.10% | 0.04% | 27% |
| CRSP US Total Market | VTI | $50k | 0.13% | 0.03% | 29% |
| CRSP US Large Cap Growth | VUG | $20k | 0.14% | 0.04% | 29% |
| CRSP US Large Cap Value | VTV | $20k | 0.14% | 0.04% | 17% |
| CRSP US Mid Cap | VO | $20k | 0.14% | 0.04% | 38% |
| CRSP US Mid Cap Growth | VOT | $20k | 0.15% | 0.05% | 35% |
| CRSP US Mid Cap Value | VOE | $20k | 0.15% | 0.05% | 21% |
| CRSP US Small Cap | VB | $50k | 0.15% | 0.05% | 44% |
| CRSP US Small Cap Growth | VBK | $50k | 0.15% | 0.05% | 48% |
| CRSP US Small Cap Value | VBR | $50k | 0.15% | 0.05% | 34% |
| Dow Jones U.S. Dividend 100 | SCHD | $20k | 0.16% | 0.06% | 17% |
| S&P Developed Markets ADR | EFA | $20k | 0.17% | 0.32% | 23% |
| S&P 500 Information Technology | XLK | $20k | 0.19% | 0.08% | 22% |
| S&P Emerging ADR | IEMG | $20k | 0.19% | 0.09% | 38% |
| S&P 500 Momentum | SPMO | $20k | 0.20% | 0.13% | 24% |
| Russell 1000 | IWB | $50k | 0.22% | 0.15% | 27% |
| Russell 2000 | IWM | $50k | 0.26% | 0.19% | 55% |
| Russell 3000 | IWV | $50k | 0.27% | 0.20% | 29% |
| S&P 100 | OEF | $20k | 0.27% | 0.20% | 24% |
| MSCI World ADR | URTH | $20k | 0.29% | 0.24% | 23% |
| MSCI ACWI ADR | ACWI | $20k | 0.32% | 0.32% | 23% |
| MSCI EAFE ADR | EFA | $50k | 0.32% | 0.32% | 20% |
| MVIS US Listed Semiconductor 25 | SMH | $20k | 0.35% | 0.35% | 16% |
| S&P 500 Shariah | SPUS | $20k | 0.35% | 0.45% | 24% |
Frec is cheaper than the ETF on 6 of 25
Do the subtraction Frec's table invites and the result is more interesting than the headline. Frec genuinely undercuts the benchmark ETF twice: S&P Developed Markets ADR at 0.17% against EFA's 0.32%, and S&P 500 Shariah at 0.35% against SPUS at 0.45%. It ties on four more, including the famous S&P 500 strategy, which costs exactly what SPY costs. On the remaining 19 you pay a premium, and against the Vanguard-benchmarked strategies the multiple is steep: CRSP US Total Market is 0.13% against VTI's 0.03%, so 4.3 times the price of just owning the fund.
That premium is the whole trade, so price it
Paying more than the ETF is not a criticism of Frec, it is the entire proposition: the extra basis points buy loss harvesting and the right to exclude companies, neither of which a fund can give you. What matters is whether the extra clears. On CRSP US Total Market you are paying an extra 0.10% a year, or $50 on $50,000, for a strategy Frec says has historically harvested 29%. Whether $50 buys you more than $50 of tax value is a question about your capital gains and your marginal rate, not about the platform.
Frec tax loss harvesting
The cheapest Frec strategy is not the best harvesting strategy
This is the finding that should change what you buy, and it falls straight out of the table above. Frec's published historical harvest rate is not a platform-level number, it is a per-strategy number, and it ranges from 16% on the semiconductor strategy to 55% on Russell 2000. The pattern is volatility. Small cap indices hold companies that move around far more, so in any given year many more individual positions sit below their purchase price, which is exactly what a harvesting engine needs.
Now put that next to the fee column. The four highest harvesters are Russell 2000 at 55%, CRSP US Small Cap Growth at 48%, CRSP US Small Cap at 44% and CRSP US Mid Cap at 38%. Three of those four require the $50,000 minimum rather than the $20,000 one, and Russell 2000 costs 0.26%, nearly three times the flagship price. Meanwhile the 0.09% S&P 500 strategy that draws everyone in has a published historical harvest rate of 25%, well under half of Russell 2000's.
So there are two different reasons to use Frec and they lead to two different accounts. If you want cheap S&P 500 exposure with some tax benefit as a bonus, the 0.09% strategy at $20,000 is the answer. If tax alpha is the actual reason you are here, the small cap strategies harvest roughly twice as much, and paying 0.15% to 0.26% to harvest 44% to 55% is a better trade than paying 0.09% to harvest 25%. Almost nobody frames the decision this way, because almost nobody reads past the 0.09%.
The 40% and the 25% are both Frec's numbers, for the same strategy
Frec's pricing page markets Classic as "harvest up to 40% of your portfolio in losses". Its own per-strategy table lists the historical harvest rate for the S&P 500 strategy as 25%. Both refer to the same product, and neither is annual. The 40% figure comes from a stated hypothetical: a simulation of Frec's direct index model tracking the S&P 500, run weekly in ninety-day increments from 17 December 2003 to 10 June 2022, with a $50,000 initial deposit and a 0.10% fee assumed, producing 40% accumulated tax loss savings by the end of year ten. That window contains both the 2008 financial crisis and the 2020 crash, which is when harvesting engines do their best work. Frec does not state the period behind the 25% historical figure.
Frec is more careful than most vendors here: the disclosures are on the page, they name the dates and the deposit size, and they say plainly that the results are hypothetical. Read them anyway, because "up to 40%" over a decade that included two crashes is a very different promise from "40% a year", and the second is how it usually gets repeated. The same applies to Frec's claim of up to twice the losses of an ETF-to-ETF strategy, which its footnote defines as 38.4% against 20.2% for a simulated SPY-to-IVV pair, and to the 21x figure, which assumes 2.11% of tax alpha against a 0.10% fee.
Whatever the number, the harvested loss is only worth your marginal rate applied to it, and only if you have gains to offset or can use the $3,000 a year that offsets ordinary income. We go through what the independent research actually supports on direct indexing tax loss harvesting, where providers market 1% to 2% a year of tax alpha and Wealthfront's own published backtest lands at 0.18% to 0.44%.
How many stocks can you restrict on Frec
How much you can actually change, at Frec and at everyone else
If your reason for direct indexing is excluding companies, whether for a restricted list, an employer holding or a values screen, this table decides the vendor. The caps are published in four different places and are not usually shown together.
| Platform | Indices offered | What you can change |
|---|---|---|
| Frec Classic | 25 indices | Up to 25 stocks added, removed or reweighted, plus up to 5 sectors (sector edits are not available on the S&P 500 Information Technology or MVIS Semiconductor 25 strategies) |
| Wealthfront S&P 500 Direct | 1 index | Opt out of any stock in the S&P 500, with no numeric cap published; the weights are rebalanced to keep tracking the index |
| Fidelity Managed FidFolios | 8 strategies | Up to five individual stocks or two industries, a published hard ceiling |
| Schwab Personalized Indexing | 6 strategies | Individual securities or entire industries, with no published number, "subject to investment management guidance" |
Frec's 25-stock allowance is generous in absolute terms and sits well above Fidelity's five, but note the shape of it: 25 names out of an index, plus five sectors, with sector edits switched off on the two most concentrated strategies. If you work somewhere with a long restricted list, or you want to exclude an entire theme rather than a handful of tickers, 25 names can run out faster than you expect. Wealthfront is the least constrained on paper here, but it only sells one index, so the flexibility is inside the S&P 500 or nowhere.
Frec also exposes settings the others do not: where dividends go, trading restrictions, a tracking preference, and a "strategic wash sales" toggle you can deliberately enable. Combined with the granular trade log, that is a genuinely self-directed product rather than a managed account with a customization form, which is the real difference between Frec and Schwab or Fidelity.
How does Frec make money charging only 0.09%
Where the revenue comes from, since it is not the 9 basis points
A fair question, and one people search almost word for word. At 0.09%, a $20,000 account pays Frec $18 a year, which does not cover the cost of licensing an S&P index, running a Barra risk model and clearing hundreds of trades. Four disclosed revenue lines fill the gap.
Stock lending
Frec lends out the shares held in your index, which it describes as maximizing every stock in your portfolio. Securities lending revenue is a standard brokerage income line and scales with assets rather than with the fee rate. It is the most likely reason 9 basis points is viable at all.
The portfolio line of credit
You can borrow up to 70% of portfolio value, quoted at 4.64% when we checked, though the initial availability is typically 50% and rises as the portfolio appreciates. Lending against a diversified equity portfolio at that rate is a much better business than a 9 basis point management fee.
The expensive strategies
Long Short runs 0.50% to 1.30% plus 0.23% to 0.86% in financing, and Diversify runs 0.60% to 1.10% plus financing, both at $100,000 to $500,000 minimums. The 0.09% S&P 500 strategy is the front door. The margin lives in the products it introduces you to.
Fee tiering inside Classic itself
Even within Classic the average client does not pay 0.09%. Fourteen of the 25 strategies cost 0.15% or more and the top ones charge 0.35%, close to four times the headline. The blended rate across a real book of clients is well above the number in the marketing.
None of this is hidden and none of it is a reason to avoid Frec. It is a reason to stop treating 0.09% as the platform's price. Ask which strategy you will actually hold, whether you intend to borrow, and whether you are comfortable with your shares being lent out, and you will have the real cost of the relationship.
Frec vs Wealthfront vs Fidelity vs Schwab
Frec against the platforms people actually cross-shop it with
| Platform | Minimum | Annual fee | Indices | Loss harvesting | Structure |
|---|---|---|---|---|---|
| Frec Classic | $20,000 to $50,000 | 0.09% to 0.35% | 25 | Systematic, daily checks | Broker-dealer and RIA, self-directed |
| Wealthfront S&P 500 Direct | $5,000 | 0.09% | 1 | Systematic | Robo-advisor |
| Wealthfront US Direct Indexing | $100,000 | 0.25% advisory | US total market | Systematic | Robo-advisor |
| Fidelity Managed FidFolios | $5,000 to be invested | 0.40% index, 0.70% active | 8 | Limited basis, at the manager's discretion | Managed account |
| Schwab Personalized Indexing | $100,000 | 0.40%, 0.35% above $2M | 6 | Daily monitoring by portfolio managers | Separately managed account |
| Broad index ETF (baseline) | 1 share | 0.03% to 0.10% | One fund | None, losses net inside the wrapper | Fund |
Frec's own competitive chart, dated 22 May 2026, claims it is one of only three fully automated US retail direct indexing providers alongside Wealthfront S&P 500 Direct and Fidelity Managed FidFolios, and that everyone else requires talking to a human advisor first. That is a vendor's claim about its own market, so treat it as a starting point rather than a fact. It matches what we find, though: Schwab runs Personalized Indexing as a separately managed account, and Vanguard and Parametric do not publish retail pricing at all.
The fee spread here is the largest in the market. Frec and Wealthfront sit at 0.09% for the S&P 500 while Schwab and Fidelity sit at 0.40%, so the managed-account options cost more than four times the self-directed ones. That gap buys you professional management and, at Schwab, daily monitoring by portfolio managers. Whether that is worth 31 extra basis points on a six-figure account is the actual decision, and we work it through in Frec vs Schwab Personalized Indexing and, for the closer fight, Frec vs Wealthfront direct indexing. The whole field sits side by side on direct indexing platforms, and if Fidelity is on your list, Fidelity Managed FidFolios has the pricing and the much weaker harvesting language.
Is Frec worth it
Who it fits, and who should look elsewhere
It fits you if
You have $20,000 or more in taxable money, you are realizing capital gains you would like to offset, you are happy running the account yourself without an advisor, and you want an index other than the S&P 500. That last point is Frec's strongest argument: 25 licensed indices covering small cap, mid cap, value, growth, momentum, dividend, sector, Shariah and ADR-based international exposure is a wider shelf than anyone else sells at retail. It also fits if you want visibility, since the granular trade log and the per-strategy harvest data are unusually open.
Look elsewhere if
You have under $20,000, in which case Wealthfront's $5,000 entry is the only realistic direct indexing option. Or the account is a retirement account, where there are no capital gains to harvest and the whole tax argument evaporates. Or you want someone else to manage it, which is what Schwab and Fidelity charge 0.40% for. Or you want to hold a basket that is not one of the 25 licensed indices, because adjusting 25 names around an index is not the same as designing your own.
One scenario worth naming because it comes up constantly and no vendor page addresses it: you already direct-index somewhere else and the fee difference has you thinking about moving. Transferring a direct indexing account is not like transferring a fund position. An account holding several hundred individual lots, many with embedded gains, does not simply relocate. Either you transfer the positions in kind and inherit a portfolio your new provider did not choose, or you liquidate and realize the gains you spent years deferring. Model both paths before you file the transfer paperwork, because the tax bill on the second one routinely dwarfs the annual fee saving that prompted it.
Being straight about this
Indexes is not a Frec product and does not manage money
No affiliation
We have no relationship with Frec and are paid nothing for anything on this page. Every figure and quotation comes from Frec's own published pages in August 2026. Fees, minimums and index line-ups change, so confirm them with Frec before you act.
What we do not do
We do not custody assets, place trades, harvest losses or track cost basis, and we are not a registered investment adviser or a tax advisor. If you want an account that actually holds the stocks and harvests the losses, that is Frec's job or a competitor's, not ours.
What we do instead
We are the modeling layer that runs before you fund anything. Define the members and the weights, backtest that exact construction over real market history, and track it as a named index against the S&P 500 or BTC. No minimum, from $12 a month.
The reason that sequence is useful here is specific to Frec. Frec hands you 25 indices and asks you to pick one, and the harvest rate table above shows that the choice is worth real money. Before you commit $20,000 or $50,000 to a strategy, it costs nothing to see how a small cap construction, a total market construction and the S&P 500 actually behaved against each other over the same decade, and how much the small cap version really moved around. That is a modeling question, and you can answer it in a few minutes by backtesting the portfolio here. If you want the concepts first, start with what direct indexing is, or see the case for running it yourself in Frec alternatives.
Questions
Frec direct indexing, answered
How much does it cost to direct index on Frec?
Frec Classic costs 0.09% to 0.35% a year depending on which index you pick, not a flat 0.09%. The 0.09% headline is the S&P 500 strategy specifically. CRSP US Large Cap is 0.10%, CRSP US Total Market is 0.13%, Russell 2000 is 0.26%, and the most expensive strategies, S&P 500 Shariah and MVIS US Listed Semiconductor 25, are 0.35%. On $50,000 that spread is the difference between $45 and $175 a year.
What is the minimum investment to direct index with Frec?
The Classic minimum is $20,000 or $50,000 depending on the strategy. The S&P 500, CRSP large and mid cap, S&P 100, sector and ADR strategies open at $20,000. The small cap strategies, CRSP US Total Market, all three Russell indices and MSCI EAFE ADR require $50,000. The Long Short and Diversify products start at $100,000 and run to $500,000. So the honest answer is $20,000 for most people, but check the strategy you actually want first.
Is Frec the cheapest direct indexing platform at 9 bps?
On the S&P 500 specifically, Frec and Wealthfront are tied at 0.09%, and both are roughly four times cheaper than Schwab or Fidelity at 0.40%. But Frec is only 0.09% on one of its 25 strategies. If you want the total US market, Frec charges 0.13% and Wealthfront does not sell that as a standalone product below $100,000. The accurate statement is that Frec and Wealthfront share the cheapest entry price in US retail direct indexing, and Frec is the cheaper of the two once you want anything other than the S&P 500 at a small balance.
How does Frec make money charging only 0.09%?
Four ways, all disclosed on its own site. The management fee is the visible one. Frec also runs a stock lending program that lends out the shares in your index. It sells a portfolio line of credit against your holdings, quoted at 4.64% when we checked, on borrowing of up to 70% of portfolio value. And 0.09% is its loss-leader price: the Long Short product is 0.50% to 1.30% plus 0.23% to 0.86% in financing costs, and Diversify is 0.60% to 1.10% plus financing. The cheap S&P 500 strategy is the front door, not the whole business.
How many stocks can I restrict on Frec versus Wealthfront?
Frec publishes a cap: you can add, remove or reweight up to 25 stocks, and remove or reweight up to 5 sectors, with sector edits unavailable on the S&P 500 Information Technology and MVIS Semiconductor 25 strategies. Wealthfront publishes no numeric cap on S&P 500 Direct and says you can opt out of any stock in the index while it rebalances the weights to keep tracking. For reference, Fidelity caps Managed FidFolios at five stocks or two industries. If your reason for direct indexing is screening out a long restricted list, Wealthfront is the least constrained and Fidelity the most.
How much can you actually tax loss harvest with Frec?
Frec publishes two different numbers for the same S&P 500 strategy and they are worth separating. The marketing headline is "harvest up to 40% of your portfolio in losses", which comes from a hypothetical simulation over ten years from December 2003 to June 2022 with a $50,000 initial deposit and weekly harvesting. The per-strategy pricing table lists a "historical harvest rate" of 25% for the same strategy. Both are cumulative over a period, not annual, and the harvest rate varies enormously by strategy: 55% for Russell 2000, 48% for CRSP US Small Cap Growth, and only 16% for the semiconductor strategy.
Which Frec strategy harvests the most losses?
Russell 2000 at 55%, followed by CRSP US Small Cap Growth at 48%, CRSP US Small Cap at 44%, and CRSP US Mid Cap and S&P Emerging ADR at 38%. The pattern is volatility: small caps move more, so more individual holdings dip below their cost basis. The catch is that the highest-harvesting strategies mostly carry the $50,000 minimum rather than the $20,000 one, and Russell 2000 costs 0.26% rather than 0.09%. The cheapest Frec strategy and the highest-harvesting Frec strategy are not the same product.
Is Frec cheaper than just buying the ETF?
On six of its 25 strategies, yes or it ties. Frec undercuts the benchmark ETF on S&P Developed Markets ADR (0.17% against EFA at 0.32%) and S&P 500 Shariah (0.35% against SPUS at 0.45%), and it matches on the S&P 500 (0.09% against SPY), MVIS Semiconductor 25, MSCI ACWI ADR and MSCI EAFE ADR. On the other 19 you pay a premium, and against the Vanguard-benchmarked strategies that premium is large in relative terms: CRSP US Total Market is 0.13% against VTI at 0.03%, so 4.3 times the cost. That premium is what buys you the harvesting, which is the whole trade.
What is Frec's tracking error?
Frec markets "less than 1%" tracking error and licenses MSCI's Barra risk model to manage it. The footnote is more specific: over 36 simulation runs of the S&P 500 from December 2003 to June 2022 with a $50,000 deposit, the standard deviation of observed excess return was 8.2%, which Frec describes as approximately plus or minus 0.77% annually. These are simulated rather than realized client results. Tracking error is the real cost people forget about, because a 0.77% annual dispersion around the index dwarfs a 0.09% fee in either direction.
Is Frec legit and is my money safe?
Frec Markets, Inc. operates through two wholly owned subsidiaries, Frec Securities LLC (the broker-dealer) and Frec Advisers LLC (the registered investment adviser), and Frec invites you to check Frec Securities LLC on FINRA's BrokerCheck. It is only available to US residents. That is the normal structure for a US retail brokerage. Being properly registered is not the same as being right for you, and none of it protects you from market losses or from picking the wrong strategy.
What is Frec Diversify?
Diversify is a separate product for people holding a large concentrated position in one stock, usually from equity compensation, who want to spread it out without a single large taxable event. It costs 0.60% to 1.10% a year plus 0.23% to 0.57% in post-tax financing costs, and runs from $100,000 to $500,000. It competes with exchange funds rather than with ETFs or ordinary direct indexing, and the financing costs mean the all-in figure is meaningfully above the headline fee. Do not compare its price to the 0.09% Classic number.
Does Frec support fractional shares?
Yes. Fractional shares are what make direct indexing work at $20,000: you cannot own a proportional slice of 500 companies with whole shares at that balance. Frec also lets you fund a direct index with existing stock positions rather than cash, move individual stocks in and out, and see the granular trades behind the scenes. That last one matters more than it sounds, because it is how you check whether the harvesting is doing anything in a flat year.
Frec vs Wealthfront: which is better for direct indexing?
They tie on price for the S&P 500 at 0.09%, and the decision comes down to two things. Wealthfront has the lower entry point at $5,000 against Frec's $20,000, and no published cap on how many stocks you can exclude. Frec has 25 indices against Wealthfront's single S&P 500 Direct strategy, publishes per-strategy harvest rates, and offers small cap and international direct indexing that Wealthfront does not sell at retail. Under $20,000 the answer is Wealthfront by default. Above it, the answer depends on whether you want an index other than the S&P 500.
Does Frec avoid wash sales?
Frec harvests systematically and even offers a "strategic wash sales" setting you can turn on deliberately, but no direct indexing platform can see the accounts it does not custody. If your 401(k) or IRA buys an S&P 500 fund on an automatic schedule, that purchase can wash out a loss the Frec account just harvested, and under IRS Revenue Ruling 2008-5 a replacement bought inside an IRA disallows the loss permanently without stepping up your IRA basis. Coordinate your automatic contributions before you start harvesting, at any provider.
Who should not use Frec?
Anyone with less than $20,000, anyone whose account is a retirement account, where there are no capital gains to harvest and the entire tax argument disappears, and anyone who wants a human advisor, since Frec is deliberately self-directed. It is also the wrong tool if you want to hold a bespoke basket that is not one of the 25 licensed indices, because you can adjust 25 names around an index but you cannot design your own from scratch.
Go deeper
Pick the strategy before you pick the platform
Build the index you are considering, weight it your way, backtest it against real market history and track it against the S&P 500. No minimum, no account transfer, from $12 a month.