Investing Ideas

What is direct indexing?

An investment approach enhanced for tax management and customization.

By: Fidelity Investments

Updated: 11/28/2025

Key Takeaways

Investors looking for ways to address concerns around tax management and personalization may consider direct indexing.
Direct indexing strategies allow investors to pursue the returns of a benchmark while potentially enhancing their after-tax returns.
When a direct indexing strategy is used as part of a custom separately managed account (SMA), investors may be able to personalize their portfolio to address values or preferences, exclude individual stocks or transition out of concentrated positions.

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What is direct indexing?

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