March 16, 2022 | Bryan J. Dori, Managing Director, Head of BNY Archer
Cerulli Associates recently predicted that direct index assets will grow at an annualized rate of more than 12% over the next five years – faster than ETFs and mutual funds. The largest asset managers are buying in with Vanguard announcing its first ever acquisition of a direct index technology provider and Fidelity launching its own retail-focused direct indexing product suite. Direct indexing is one of the fastest growing segments of investing – and asset managers are finding ways to capture the opportunity.
It's growing – fast
Direct indexing strategies appeal to investors for their ability to provide customization and tax optimization. Because investors can select individual securities they like and avoid those they dislike, direct indexing offers a more flexible and personalized approach to investing in broad indexes, including individual ESG preferences. Additionally, portfolio managers can harvest tax losses at the individual position level as opposed to having to buy or sell the entire fund, leading to significant tax advantages.
Technology makes it possible
Direct indexing traditionally required significant portfolio manager oversight, making it more feasible for larger institutions and highnet-worth individuals. Today, digital investing platforms and fractional share trading enable small amounts of money to be invested in each position in exchange for a fraction of a share, making direct indexing more accessible to mainstream audiences. With this technology doing the heavy lifting, more asset managers can offer personalized investments at scale and launch their own offerings to provide powerful customization and tax optimization to their clients.
DIRECT INDEXING: TAKE THE FIRST STEP
A manager’s ability to successfully offer direct indexing starts with a technology provider well versed in the digital capabilities needed to successfully support direct indexing. Experienced partners can help managers identify what they need and how to keep costs down as they scale.
Archer technology is designed to support the needs of asset managers launching new product sets – including direct indexing – and growing their business. Let us help you get started today.
Bryan J. Dori
Managing Director, Head of BNY Archer
Bryan Dori, Managing Director, Head of BNY Archer, has guided the company to become an industry leader in operations, technology, and client service. Having spent his career building solutions that streamline every stage of the investment lifecycle, he has transformed BNY Archer’s business by expanding the firm’s scope of services to help managers meet demand for increased customization. Under Bryan’s leadership, BNY Archer was named 2020 winner of the WatersTechnology Best Outsourcing Provider to the Buy Side award and one of the Inc. 5000 fastest-growing private companies in the U.S. In 2021, BNY Archer’s former private equity investor, NewSpring Capital, inducted Bryan into its CEO Hall of Fame. He is often quoted in the news media on financial trends and regularly blogs on BNY Archer’s website.
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