
Technology is allowing an investment strategy that was previously available mostly to high-net-worth clients to now be mass marketed: A customized portfolio can be offered to every client. Compared to a passive portfolio invested in pooled investments products, “direct indexing” seeks to mimic an index by owning all, or a representative portion, of the stocks in the index, individually. The next step to “custom indexing” allows the broker and the client to pick and choose those stocks from the index to invest in and hold.[1] The new products introduce the concept of tax-loss selling and its benefits to a wider audience. Not too long ago, Wall Street had suggested tax law changes to Congress which would have curtailed tax loss selling generally. Hopefully, the new push to mass market custom indexing will prevent that from recurring.