Long short direct indexing and long short tax loss harvesting: every tax aware long short provider's fees and minimums.
Seven published tiers from the two firms that take you without an advisor, put on one all-in cost basis, plus what the adviser-only managers file with the SEC. Then a tool for modeling the core index before you lever it.
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In short
Only two US providers sell long short direct indexing without a financial advisor: Frec, from $100,000, and Cache, from $1,000,000. Both publish every tier. On an all-in basis (advisory fee plus pre-tax financing) the cheapest entry is Cache 130/30 at 0.78% a year, then Frec 140/40 at 0.88%, and the most aggressive is Frec 250/150 at 2.725%. Both firms charge financing at almost exactly 0.95% of the short extension, so financing is a wash and the real differences are the advisory fee, the minimum and the leverage ceiling. At 200/100 the two cost exactly the same. Aperio, Parametric, AQR and Quantinno are adviser-only, and AQR and Quantinno publish no fees at all.
Last updated September 2026
Long short direct indexing fees compared
What each direct-access tier costs, all in
Both vendors lead with an after-tax financing number. We show the pre-tax one next to it, because the after-tax figure only exists if you can deduct the interest, and plenty of buyers cannot. The harvesting column is each provider's own estimate, in its own units.
| Provider | Tier | Minimum | Advisory fee | Financing, pre-tax | Financing, as quoted after tax | All in, pre-tax | Provider's harvesting estimate |
|---|---|---|---|---|---|---|---|
| Frec | 140/40 | $100,000 | 0.50% | 0.38% | 0.23% | 0.88% | 22% in year 1, 12% a year after |
| Frec | 200/100 | $500,000 | 1.00% | 0.95% | 0.57% | 1.95% | 265% of a $1M account over 10 years (simulated) |
| Frec | 250/150 | $500,000 | 1.30% | 1.425% | 0.86% | 2.725% | 337% of a $1M account over 10 years (simulated) |
| Cache | 130/30 | $1,000,000 | 0.50% | 0.28% | 0.17% | 0.78% | 8% to 12% a year |
| Cache | 145/45 | $1,000,000 | 0.60% | 0.43% | 0.26% | 1.03% | 12% to 18% a year |
| Cache | 175/75 | $3,000,000 | 0.75% | 0.71% | 0.43% | 1.46% | 20% to 30% a year |
| Cache | 200/100 | $3,000,000 | 1.00% | 0.95% | 0.57% | 1.95% | 24% to 35% a year |
Read the harvesting column with care. Frec's 140/40 figure is an average harvesting capacity and its 200/100 and 250/150 figures are cumulative ten-year results from a Russell 1000 simulation, against 30% for its classic long-only product over the same simulation. Cache's figures are annual estimates, set against "3% - 8% for traditional direct indexing". Neither is a promise, and the two cannot be lined up row for row. What they agree on is the shape: every step up in leverage roughly buys proportionally more harvested losses and costs proportionally more.
Tax aware long short pricing, decoded
Three things the vendor comparisons leave out
Financing is priced the same everywhere
Divide each tier's pre-tax financing by the size of its short extension. Frec: 0.38% on 40, 0.95% on 100, 1.425% on 150. Cache: 0.28% on 30, 0.43% on 45, 0.71% on 75, 0.95% on 100. Every one of them lands between 0.93% and 0.95% of the extension. Neither firm is cheaper to borrow through, so stop comparing the financing lines and compare the fee.
The fee is about 1% per 100 points of short
Frec charges 0.50% for a 40-point short, 1.00% for 100 and 1.30% for 150. Cache charges 0.50% for 30, 0.60% for 45, 0.75% for 75 and 1.00% for 100. Per unit of extension, Frec's 140/40 is cheaper than Cache's 130/30 and 145/45, and Cache's 175/75 matches Frec's 200/100. At 200/100 the two are identical to the basis point: 1.00% plus 0.95%.
Aperio's 0.55% is its filed schedule
Vendor comparisons quote about 0.55% for Aperio's 130/30 strategy without saying where it comes from. Aperio's own Form ADV does: a 0.35% US base fee plus a Short Advisory Fee of 0.20% while gross exposure stays at or under 200%. A 130/30 book is 160% gross, so 0.35% plus 0.20% is 0.55%. Add financing and your advisor's fee on top.
Best long short direct indexing by account size
What your balance actually unlocks
$100,000 to $499,999
One option: Frec 140/40
0.50% plus about 0.38% financing, benchmarked to the Russell 1000, S&P 500, MSCI World ADR or MSCI ACWI ADR, with a growth, value or quality tilt. Nobody else publishes a long-short product this small.
$500,000 to $999,999
All three Frec tiers
200/100 and 250/150 open here. Frec does not offer a value tilt at 200/100 or 250/150. This is also the balance at which Frec lets you borrow against a long-short account, through a portfolio margin account.
$1,000,000 to $2,999,999
Cache, and the adviser channel
Cache 130/30 and 145/45 open at $1,000,000, held at Schwab in your name. Parametric's Custom Extension SMA lists $1,000,000 at 40 bps, and Aperio, AQR and Quantinno become realistic through an advisor.
$3,000,000 and up
Everything, subject to custody
Cache 175/75 and 200/100, and Parametric's high leverage extension at 58 bps. At this size the constraint is often the custodian, not the manager: see the April 2026 Schwab limits below.
| Adviser-only manager | What is published | Minimum | How you get in |
|---|---|---|---|
| Aperio (BlackRock) | 0.35% US base plus a Short Advisory Fee of 0.20% up to 200% gross exposure, 0.40% from 200% to 300%. Factor-tilted long/short is a flat 0.45% or 0.90%. | Not filed firm-wide; commonly cited at $1,000,000 | Financial advisor only, and the advisor adds a fee |
| Parametric Custom Extension SMA | 40 bps; 58 bps for the high leverage version. The ADV says fees "are all negotiable". | $1,000,000; $3,000,000 for high leverage | Financial advisor only |
| AQR Flex | Not publicly disclosed | Not publicly disclosed | Financial advisor or wirehouse only |
| Quantinno DEALS | Not publicly disclosed | Not publicly disclosed | Financial advisor only |
The adviser channel is where the bigger books live. Frec's own comparison, citing AQR, puts AQR at roughly $68.8 billion in tax-aware long-short vehicles, and Quantinno reports $48.4 billion firm-wide. What you cannot do there is see the whole price before you sign, because the manager fee, the financing and the advisor's own fee arrive as separate lines. We laid out the filed Parametric and Aperio schedules in full in Parametric vs Aperio pricing, and the rest of the adviser channel sits on direct indexing fees compared.
Long short tax loss harvesting, the fine print
When the after-tax numbers are real, and when they are not
Frec and Cache both quote financing after tax. Frec uses a 40% marginal rate; Cache's list assumes 31% federal plus 9% California, which is the same 40%. That haircut depends on deducting the interest, and IRS Publication 550 is plain about the limit: "Generally, your deduction for investment interest expense is limited to your net investment income." Investment interest is figured on Form 4952 and taken as an itemized deduction. If you take the standard deduction, or your net investment income is small, the after-tax column does not apply to you and the pre-tax column is your price. Whether every piece of a short book's carrying cost counts as investment interest is a question for your CPA, not a vendor chart.
The harvested losses need somewhere to go. Capital losses offset capital gains without limit, but once your gains are used up only $3,000 a year of the excess comes off ordinary income, and the rest carries forward. This is the single question that decides whether long-short is worth its fee: do you have, or will you soon have, large realized gains? A vesting schedule, a business sale, a concentrated position you are selling down or an active trading account says yes. A W-2 salary and an index fund says no, and a 0.88% to 2.725% annual cost buys you a growing carryforward.
The short side also changes the character of what you harvest. Publication 550 sets the holding period of a short sale by "the amount of time you actually hold the property that's eventually delivered to the lender to close the short sale", and its own worked example produces a short-term loss on a short held for 13 months. Short-term losses net against short-term gains first, which is useful if your gains are short-term and less useful if they are all long-term. Before you commit, run your expected gains through the tax loss harvesting calculator, which applies the Schedule D netting order rather than a single rate.
Long-short defers tax rather than erasing it. The losses you harvest lower your basis, and the long book you end up holding carries the gains. That is still worth a lot if you hold for decades, if the account passes at death, or if the losses let you exit a concentrated position that would otherwise cost you 30% of the gain in one year. It is worth much less if you plan to sell everything in three years.
Tax aware long short in 2026
The custodian now decides which tiers you can open
On April 23, 2026 Schwab told advisers it was tightening long-short separately managed accounts on its platform, which Citywire, Bloomberg, AdvisorHub and InvestmentNews all reported. As Frec summarizes the memo, new enrollments and incoming transfers are capped at 200/100, portfolio margin accounts need $3,000,000 and Reg T margin accounts $1,000,000, and no adviser may hold more than 30% of its Schwab assets in long-short SMAs. Citywire separately reported that Fidelity paused new long-short SMA flows in December 2025 and has since made the pause indefinite.
That matters more than any fee on this page if you want high leverage. Cache custodies at Schwab, so its new accounts stop at 200/100. Aperio custodies mainly at Fidelity and Schwab. AQR and Quantinno depend on your advisor's custodian. Frec clears through Apex Clearing, which had announced no equivalent limits when Frec published its comparison, and that is why Frec is currently the only published route to 250/150 for new money. Frec is an interested party in saying so, and custodian policy changes with little notice, so confirm current availability with the provider in writing before you move assets.
Two account-level details follow from the structure. Frec's Form CRS, dated August 20, 2026, says advisory clients "are required to open a margin or portfolio margin brokerage account" with Frec Securities, which is normal for a long-short book and worth knowing before a spouse or a trustee asks why the account is on margin. And Cache's accounts sit at Schwab in your own name as a separately managed account, which some buyers will value more than any basis point.
How long short direct indexing works
From a core index to a book that harvests in rising markets
01
Fund a core
You pick a benchmark and fund it with cash or existing stock and ETFs. Both Frec and Cache accept transferred positions, which is how people bring a concentrated holding in without selling it first.
02
Add the extensions
The manager shorts stocks it expects to lag and uses the proceeds to buy more of the ones it expects to lead. At 140/40 you hold 140% long and 40% short, and net market exposure stays near 100%.
03
Harvest both sides
Long positions that fall and short positions that rise both produce losses. Because a rising market always pushes some shorts under water, the book keeps generating losses long after a plain direct index runs dry.
04
Delever slowly
When you are done, the extensions are wound down over time and what is left is a long-only portfolio. Frec says it can unwind into its classic direct index; Cache says to expect several years, not months.
If your real problem is one stock rather than a whole portfolio, the comparison changes: exchange funds and outright sales come into it, and we worked that decision through separately in the best direct indexing options for a concentrated stock position. If you have been running a long-only direct index for years and it has stopped producing losses, no losses left to harvest covers where long-short fits among the ways to reset it.
Being straight about this
Indexes does not run long-short accounts
No affiliation
We have no relationship with any provider on this page and are paid nothing by them. Every fee and quotation comes from the provider's own pages, fee schedule or SEC filing, checked in September 2026.
What we do not do
We do not custody assets, place trades, short stocks, harvest losses or lend on margin, and we are not a registered investment adviser or a tax advisor. The account itself is Frec's job, Cache's, or an advisor's.
What we do instead
Every long-short account is built on a core index plus a factor tilt, and you have to pick both. Build the core, weight it toward growth, value or quality names, and backtest the construction before you put leverage under it. From $12 a month.
The reason that step earns its keep here is leverage. A tilt that underperforms its benchmark by two points a year costs you two points on a long-only account and roughly twice that on a 200/100 book, and the tracking error Frec quotes for 140/40 is already plus or minus 1.52% a year. Seeing how a growth-tilted Russell 1000 construction actually behaved against the plain index over a full cycle, including the bad years, is cheap next to the fee you are about to sign up for. You can do it in the studio at the top of this page, or start from backtesting a portfolio.
Long short direct indexing questions
What people ask before they pick a provider
What are the best long-short direct indexing platforms that don't require going through an advisor gatekeeper?
Two: Frec and Cache. Both let you enroll online and both publish their full fee schedules. Frec starts at $100,000 for its 140/40 tier at 0.50% plus about 0.38% in pre-tax financing, and opens 200/100 and 250/150 at $500,000. Cache starts at $1,000,000 for 130/30 at 0.50% plus 0.28% financing. Aperio, Parametric, AQR Flex and Quantinno are sold only through financial advisors, who add their own fee on top.
What minimum account size do I need to access a 200/100 or higher long-short direct indexing strategy?
$500,000 at Frec, which is the lowest published entry point for 200/100 and the only one for 250/150. Cache requires $3,000,000 for 175/75 and 200/100. On the adviser channel, Parametric's high leverage Custom Extension SMA lists $3,000,000. Also note that Schwab told advisers in April 2026 that new long-short accounts on its platform are capped at 200/100, so tiers above that are not available at Schwab-custodied providers for new money.
What are Frec long-short 140/40 margin borrowing rates and total advisory fees?
Frec's published 140/40 cost is a 0.50% annual advisory fee plus financing of about 0.38% a year pre-tax, which Frec restates as 0.23% after tax using a 40% marginal rate. All in, that is 0.88% before tax. The minimum is $100,000. Frec prices financing as a share of total assets rather than quoting a margin rate, so compare it to Cache's 0.28% on 130/30, not to a brokerage margin rate.
Which long-short direct indexing platforms let you see the individual stock lots and short positions in your account, versus an advisor-run SMA?
Both direct-access providers show the positions. Frec lists "See the granular trades" among its long-short features, and Cache's dashboard shows your long positions, short positions and cash, with losses harvested tracked alongside net realized gains. With Cache the securities sit in a separately managed account at Schwab in your name. With the adviser-only managers, what you see depends on the advisor's reporting platform.
Which providers let you convert the long side of a long-short direct index into a regular direct index later without a full liquidation?
Frec says so directly: "You can unwind into a classic direct index, in a way designed to keep your net harvested losses still intact." It can do that because it runs long-only and long-short on one platform. Cache describes gradually dialing back the extensions until "what remains is a diversified, long-only portfolio", which it manages at 0.20% once fully deleveraged. Both warn the process takes time; Cache says several years, not months.
If I open a long-short direct index with a provider like Frec, am I locked in, or can I unwind the leverage on my own schedule and transfer out via ACATS?
There is no lock-up at Frec or Cache, and both let you reduce leverage when you choose. The constraint is tax, not contract. The long book will usually carry gains and the short book has to be closed before the account can move, so a fast exit realizes gains the losses were meant to offset. Frec charges $75 for an outgoing ACATS transfer, and fractional shares cannot move through ACATS at any broker.
Does Frec let me trade around the positions in my long short direct index, or is it fully hands-off?
Mostly hands-off by design. Frec's page says "We tilt and trade for you" and that managing the extensions "requires daily rebalancing decisions", which it handles automatically with licensed staff overseeing. What you control is the index, the factor tilt (growth, value or quality) and the leverage tier, and Frec says you can switch any of them at any time. It does not describe hand-trading individual extension positions, so ask before funding if that matters.
What leverage level does Frec recommend for long short direct indexing and how do I pick one?
Frec does not publish a recommendation for a given investor. Pick on three things: the minimum you can meet ($100,000 for 140/40, $500,000 above it), the size of the gains you need to offset, and how much tracking error and financing you will accept. Higher leverage harvests more and costs more: 140/40 runs 0.88% a year all in before tax, 250/150 runs 2.725%. If your gains are modest, the lower tier or a long-only direct index is usually the better trade.
Compare Frec and Cache long-short SMAs for retail investors looking for tax alpha
Frec has the lower entry ($100,000 against $1,000,000), the higher leverage ceiling (250/150 against 200/100), and custody at Apex. Cache has the cheapest entry tier on an all-in basis (0.78% for 130/30), custody at Schwab in your own name, and Nuveen's Brooklyn Indexing running the book. At 200/100 they cost exactly the same: 1.00% plus 0.95% financing. Frec is a factor-tilt design; Cache uses a multi-factor alpha model.
Long short direct indexing vs long-only direct indexing for ongoing tax loss harvesting, what's the difference?
A long-only direct index harvests heavily in its first few years and then runs dry, because the survivors are all winners. A long-short account keeps harvesting because the short book loses money whenever the market rises. Cache puts it at 8% to 35% of the account a year depending on leverage, against 3% to 8% for traditional direct indexing. The price is roughly ten times higher, plus leverage risk.
Can I lose more than I invest in a long-short direct index?
Yes. These strategies use margin and short sales, and Frec's own disclosure states that borrowing "amplifies both potential gains and losses and may result in losses exceeding your initial investment." A short position has no ceiling on how far it can move against you. Providers manage this with exposure limits and margin buffers, and Frec reports zero margin calls in simulations from 2005 to 2025, but a simulation is not a guarantee.
Sources
All figures retrieved September 10, 2026. Frec tier minimums, advisory fees and approximate financing costs from Frec's Pricing and Fee Schedule (docs.frec.com); 140/40 tracking error, harvesting capacity, the 130% to 337% ten-year simulation, the four long-short indices, the unwind language and the 2005 to 2025 margin call simulation from frec.com/long-short-direct-indexing; the margin account requirement from Frec's Form CRS dated August 20, 2026. Cache tier minimums, advisory fees, pre-tax and post-tax financing, harvesting estimates, Schwab custody, the Brooklyn Indexing sub-adviser and the exit language from usecache.com/product/long-short. The April 2026 Schwab restrictions and the Fidelity pause as reported by Bloomberg, Citywire, AdvisorHub and InvestmentNews and summarized in Frec's own 2026 provider comparison, which Frec notes was produced by an interested party. AQR and Quantinno asset figures as cited in that comparison. Aperio fee schedule and Short Advisory Fee from Aperio Group's Form ADV Part 2A dated March 31, 2026. Parametric Custom Extension SMA fees and minimums from Parametric's Form ADV Part 2A dated March 31, 2026. Investment interest limit and short sale holding period from IRS Publication 550 (2025). 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.
Choose the core before you choose the leverage
Every long-short account is a benchmark, a tilt and a multiplier. Settle the first two on real market history before you pay 0.88% to 2.725% a year to multiply them.
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