FYI: The “Future of Investing.” The “Great Unwrapping.” The “ETF Killer”! The financial industry never lacks innovation and, apparently, the next big thing is here: direct indexing.
A typical index mutual fund or ETF owns the components of a market benchmark in a single, bundled product. For example, an S&P 500 Index fund holds approximately 500 of the largest U.S. companies weighted by market capitalization. A Dow Jones ETF holds a price-weighted basket of the 30 stocks representing the Dow Jones industrial average.
Pretty simple. Any investor owning these funds has the exact same experience. Index funds and ETFs have mushroomed in popularity due to their typically lower costs, tax efficiency, diversification and performance.
Regards,
Ted
https://www.etf.com/sections/features-and-news/direct-indexing-next-big-thing?nopaging=1
