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Benefits of Direct Indexing:

Direct Indexing can be cheaper 

When you own an ETF or fund, you pay an ongoing annual fee to own that fund. With direct indexing, you in theory do not have to pay anything to hold the index allocation. While we think investors can start to split hairs a little when evaluating a 0.05% fee fund to a 0.1% fund, the reality is that ETFs gained their edge because of low costs and now might be a victim of what they used to succeed in the first place.

Direct Indexing can be more tax efficient

When you own a fund and want to rebalance or do tax-loss selling, you can either sell units of the fund or not and those units are sitting at either a gain or a loss. With direct indexing, you would have an ability to not sell the entire index and sell only individual securities that have under or over performed within the index. So, if energy had a bad year, you could sell all energy stocks in the TSX for tax losses and continue to hold all of the other items within the fund so you don’t trigger gains. Put another way, the index itself could be up on the year but you can still harvest a tax-loss within the index. In the ETF or fund format, you would only be able to trigger a tax gain on the entire fund with this scenario.

It can be a tool to generate alpha 

The potential strategies behind direct indexing could be countless as the technology develops and improves over the years. One can envision simple factor filters where an investor can exclude any company in the index with debt over ‘X’ or any company with a payout ratio over 100%. Again, the opportunities are endless and it has the potential to give even passive investors a lot of power in tweaking their ‘passive’ allocations in a way that makes them more comfortable with their portfolio and even allowing for differentiated returns from the index, for good or bad. Perhaps the ironic thing here is that things might come full circle and direct indexing strategies will lead to investors becoming active investors again and not even realizing it!
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It reports Tuesday. He expects a huge beat, because UAL is benefiting from a lack of competition and planes, lifting ticket prices ever higher. It's one of the best performers of 2024.

It reports Wednesday. Data centres are red hot and need energy and power plants, which they will need from GEV. GEV had a good 2024 and should have a good 2025.

It reports Wednesday. SLB reported good numbers today, but that was more due to their overseas business. In contrast, HAL is more domestic, so HAL won't put up that surprise. He's bullish this name because Trump wants to drill for oil.

It reports Wednesday. He fears they might struggle with the strong USD in China

It reports Wednesday. They're still dealing with the talcum power lawsuit and a new acquisition for $14 billion which hurt JNJ's pristine credit rating. The market has turned against this sector, but he feels you reinvest their juicy dividend.

It reports Thursday. He expects a good quarter, but the last one they reported suffered from supply chain isues. So, if GE gets it right this time, they will recoup that loss.

It reports Friday. Some like its 7% dividend but he feels mixed about the risk/reward here. Doesn't have much faith.

It reports Friday. Every time it reports, the stock takes a hit that day, but AXP has had a juggernaut run in recent years.

The drug companies are in the dog house. If you buy this, you must be patient. It yields 4%.

Yields only 3%, but the CEO is doing a fine job.

Trades at 26x PE and its last quarter was merely okay. He screwed up when he sold it and shares moved up after. He can't comment on this.

This week, they reported a terrific quarter: a huge sales and earnings beat with all 3 business units performing better than expected, especially the business and investment side. This saw 18% revenue growth, driven by a 49% increase in investment banking fees. Spending came in lower than expected, and they raised their 2025 net interest forecast while maintaining its expense guidance. Their CEO sees more growth in business, overall.

They reported this week, missing slightly expectations on the top line, but beat huge on the bottom. Net interest income beat and brokerage commissions were up. Excellent credit quality and maintained their aggressive share buybacks. Management raised the forecast for net interest income.

They reported a strong quarter this week, beating top and bottom lines. Sales and trading saw the biggest growth while costs are under control. They gave the most forward looking guidance of the banks this week. Revenue forecast for 2025 was up and they announced a huge $20 billion share buyback.