As is the case with any industry, Finance has evolved from technological improvements over the decades. Direct Indexing is the next evolution in the investing landscape. Also referred to as “the Great Unwrapping“, Direct Indexing is a technology that gives investors the ability to invest directly into indices without going through the ETF structure. The technology enables investors (and advisors) to instantly create, execute in the market and manage any number of indices. In the same way as an ETF baskets of stocks are bought and sold, but with the added benefits of:
- Avoiding the potential liquidity “chokepoint” of the ETF structure.
- The ability to tax-loss harvest individual positions (because all stocks are owned directly).
- The ability to create and customize any exposure (as opposed to relying on an “off the shelf” ETF).
International ADR Index
Exposure to International Equities directly
The Palladiem iDX International ADR Index seeks to match the volatility and performance of the MSCI EAFE Index. The index is constructed by optimizing a smaller subset of the ADR universe of EAFE constituents (stocks) with a focus on neutralizing sector risks, major factor risks while maintaining a reasonable amount of tracking error relative to the MSCI EAFE Index. The index will typically hold 75 – 80 ADRs and is re-balanced quarterly
US All-Cap Multifactor Defensive
Broad Defensive Equity Exposure
The Palladiem iDX U.S. All Cap Multi-Factor Defensive Index aims to efficiently deliver broad equity exposure to high quality US equities that are expected to demonstrate low volatility going forward. The Palladiem iDX U.S. All Cap Multi-Factor Defensive Index provides efficient exposure to large-cap, mid-cap and small cap stocks that demonstrate the strongest composite volatility score, starting with an equal weighted scheme. There is robust academic evidence that considering multiple dimensions of risk (rather than simply price volatility) is a potentially superior way to exploit equity market beta, option implied volatility, and traditional price volatility. The Palladiem iDX U.S. All Cap Multi-Factor Defensive Index seeks to provide investors with exposure to defensive stocks in a more efficient, robust manner than traditional low-volatility products.