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Question

What is direct indexing and how does it enhance tax-loss harvesting?

Answer

Direct indexing means owning the individual stocks that make up an index in a separately managed account (SMA) rather than buying an exchange-traded fund (ETF) or mutual fund. Because you own each stock directly, you can harvest losses at the individual security level — selling specific positions that have declined and replacing them with similar securities.

Related FAQs

Do I need an advisor for tax-loss harvesting?

What is the difference between direct indexing and ETFs for tax-loss harvesting?

What is tax-loss harvesting and how does it function?
Tax Planning Investment Management Portfolio Management Stocks Mutual Funds ETFs Charitable Giving Executive Compensation Tax Tips & Tricks Investors Concentrated Stock/Diversification FAQs
Last Updated Oct. 16, 2026
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