Create customized portfolios using direct indexing
May 06, 2020
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4 min read
Kevin Maeda, Chief Investment Officer, Direct Indexing, Natixis Investment Managers Solutions, explains how active screening techniques can be used to customize investor portfolios for ESG, religious or other personal reasons.
- Indexing is a popular strategy, but many investors would prefer not to own some of the companies in traditional indexes.
- Direct indexing allows investors to create a personalized index in a separately managed account (SMA).
- Active screening can exclude specific securities by name, selected industries within a sector, or entire market sectors.
- Direct indexing can also support environmental/social/governance investing by including certain companies or sustainable industries through positive screening based on ESG ratings.
- Other uses include reducing overlapping risk for investors who have large individual stock positions and factor tilting to favor momentum, value or dividend yield.
