Traditional investment strategies no longer meet the evolving needs of today’s investors. People want more than just passive exposure, they want personalized portfolios that align with their financial goals, values, and tax strategies.
Enter direct indexing portfolio management: An approach that combines personalization, tax efficiency, and automation to help you build wealth on your terms.
At Alphathena, we make direct indexing seamless with AI-powered automation and intelligent portfolio customization.
Whether you’re looking to optimize tax-loss harvesting, exclude specific stocks, or build an ESG-aligned portfolio, Alphathena delivers the next evolution of investing.
How The Investment Landscape Is Changing
Today’s investors face unprecedented challenges and opportunities. Market volatility, complex tax environments, and growing interest in sustainable investing have created demand for more sophisticated solutions beyond traditional mutual funds and ETFs.
As technology advances, so too does our ability to create truly personalized investment experiences. This intersection of personalization and automation is transforming how individuals build and manage wealth by allowing them to diversify across various asset classes, such as stocks, bonds, and real estate, in order to manage risk and capitalize on opportunities.
The democratization of investment technology has opened doors previously reserved for institutional investors and the ultra-wealthy.
What was once inaccessible due to high minimums and complex implementation is now available through platforms like Alphathena that leverage artificial intelligence and advanced portfolio optimization techniques.
What You Need to Know About Direct Index Portfolio Management
Unlike mutual funds or ETFs, which bundle investments together, direct indexing allows each client to own the individual stocks within an index with fractional investments.
This means you can work with clients to:
- Customize holdings to align with each client’s goals and values
- Optimize tax strategies through automated tax-loss harvesting
- Leverage multi-account portfolio rebalancing to maintain optimal performance
With Alphathena’s cutting-edge direct indexing technology, you can take control of investment strategy like never before. And you can do it without the complexity of manual management.
Direct indexing essentially unbundles the traditional index fund, giving ownership of the underlying actual securities rather than shares of a managed fund. This direct ownership creates opportunities for customization and tax management that simply aren’t possible with packaged investment products.
The Power of Direct Indexing: Key Benefits
Enhanced Tax Efficiency
Direct indexing allows for tax-loss harvesting at the individual security level, potentially generating tax alpha of 1-2% annually. Unlike mutual funds that may distribute unwanted capital gains, direct indexing gives you control over when to realize gains or losses.
Tax loss harvesting can help reduce your tax liability and minimize the impact of capital gains tax on your investment returns. The IRS allows investors to offset capital gains with losses, and any excess losses can be carried forward to future tax years to offset ordinary income.
This ability to harvest losses at the security level while maintaining overall market exposure is a powerful advantage. When individual stocks in your portfolio decline in value, Alphathena’s technology can capture these losses for tax purposes while preserving your investment strategy.
True Portfolio Personalization
Whether you’re concerned about overexposure to certain sectors, want to align investments with values, or need to manage concentrated positions, direct indexing provides unparalleled customization options.
This flexibility allows you to create a portfolio that truly reflects individual circumstances, rather than accepting the one-size-fits-all approach of traditional investment products. It creates a true point of differentiation between advisors that stands apart from the mass commodification of portfolio models.
Improved Risk Management
By owning individual securities rather than fund shares, you gain granular control over risk factors that clients are exposed to. Alphathena’s analytics help identify and manage exposure to various market factors, allowing for more precise risk management.
This detailed approach to risk can help you avoid unintended exposures or concentrations that might be hidden within packaged products like ETFs or mutual funds.
Cost Effectiveness
Traditional personalized portfolio management was once reserved for ultra-high-net-worth individuals. Relatively recent advances like no-fee trading and the ability to own fractional shares, however, set up the foundation to expand direct indexing to investors at nearly any wealth level.
Today, Alphathena’s technology offers access to sophisticated strategies at a fraction of the traditional cost. Far from the complicated legacy software providers of yesteryear, which also may have required advisors to hand over control of their investing strategy, Alphathena delivers a pure SaaS solution that keeps advisors in the captain’s seat.
Why Investors Are Choosing Alphathena for Direct Indexing
Personalized Investing, Your Way
At Alphathena, we believe investing should be as unique as every client your firm serves. Our platform allows you to:
- Exclude stocks that don’t align with a client’s ethical or ESG preferences
- Prioritize high-growth sectors that match your investment strategy preferences
- Build a fully customizable portfolio that reflects each client’s long-term goals
Instead of settling for a one-size-fits-all investment, Alphathena puts the power in your hands to deliver personalization and an outcome-driven process that puts your clients at the center.
Our modern interface makes customization straightforward, allowing you to implement complex investment strategies without needing deep, complex training that prevents you from realizing benefits for weeks or months.
Whether you have specific stocks a client wants to avoid or sectors you want to emphasize across the board, our platform translates your preferences into a personalized portfolio for each client who needs it.
Systematic Tax Optimization
Tax efficiency is a necessity for wealthy clients, and just as necessary for advisors looking to provide the best possible outcomes. With Alphathena’s automated tax-loss harvesting, you can:
- Strategically sell underperforming stocks to offset capital gains
- Minimize tax liabilities while keeping portfolios on track with risk tolerance and planning goals
- Use real-time insights to execute tax-efficient trades automatically
This approach gives you the same tax advantages once reserved for firms serving institutional investors. Now, those capabilities are accessible through Alphathena’s intelligent automation platform.
Our algorithms continuously scan your portfolio for tax-loss harvesting opportunities, ensuring you capture available tax benefits throughout the year, not just during end-of-year tax planning. Your clients get to see your value every year, every time you choose to rebalance or make a trade.
Multi-Account Portfolio Rebalancing
Market conditions change, and your investment strategy doesn’t have to take a back seat when highlighting the value you bring through each unique market cycle. Alphathena’s automated rebalancing tools help you:
- Maintain target allocations without constant manual adjustments
- Adapt to market shifts using data-powered insights
- Stay focused on each client’s financial goals with minimal effort
With Alphathena, direct indexing isn’t just personalized. It’s also smarter.
The sophisticated rebalancing model considers multiple factors including tax implications, transaction costs, and drift tolerances to optimize when and how to bring your portfolio back to its target allocation.
ESG Investing Reimagined Through Direct Indexing
Beyond Basic Screening
Traditional ESG funds often take a one-size-fits-all approach to ethical investing. With Alphathena’s direct indexing platform, you can:
- Define your own (or your client’s) ESG priorities rather than accepting a fund manager’s definition
- Target specific impact areas that matter most to your clients or align best with your firm’s investment philosophy
- Adjust ESG criteria as priorities evolve
This customization allows for a more authentic alignment between investments and personal values, rather than accepting a standardized definition of what constitutes “sustainable” or “ethical” investing.
Balance Performance and Purpose
Alphathena’s AI-powered direct indexing platform is built to balance personalization with performance—enabling investors to express their values while maintaining close alignment to market benchmarks. Our multi-step optimization process is designed to minimize tracking error, even when applying ESG overlays or exclusions, as detailed in our tracking error framework and transition engine approach.
This balanced approach means you don’t have to choose between competitive returns and investing according to a client’s principles. You can pursue both simultaneously.
How to Get Started with Direct Indexing
Before implementing direct indexing into your firm, identify which clients the strategy can make most sense for. Then, ask your clients to gauge their interest with questions like these:
- What are my short-term and long-term financial objectives?
- How much risk am I comfortable taking?
- Do I want to incorporate ESG or value-based investing principles?
- Am I interested in active investing strategies to potentially achieve higher returns through hands-on portfolio management?
Our intuitive strategy builder helps translate each client’s financial goals and preferences into specific portfolio parameters, making complex investment decisions accessible even to those without a high net worth or extremely complicated needs that include legacy holdings or equity compensation structures.
Choose the Ideal Portfolio Structure
Next, you can:
- Select pre-built index models or customize your own
- Apply tax-smart strategies with automated tax-loss harvesting
- Adjust stock inclusions and exclusions to match your values
Our platform offers flexibility to start with established models aligned to a specific index that you can then customize, or build a completely personalized custom index from the ground up based on your unique requirements.
Let Us Optimize Your Custom Index While You Manage It
Once your portfolio is set up, Alphathena’s system continuously monitors and adjusts your investments to:
- Maximize tax efficiency
- Maintain optimal asset allocation
- Execute automated trades for smarter investing
Best of all, all of this is done to your specifications and you stay in control of the decisions.No more manual trading or guesswork, just efficient, data-driven investing that adapts to changing market conditions and evolving strategic shifts you want to make for clients.
Take the Next Step: Experience Alphathena’s Direct Indexing Today
Direct indexing represents a fundamental shift in investment management, from standardized products to truly personalized solutions. As markets grow more complex and investors seek greater alignment between their portfolios and their values, direct indexing offers a powerful alternative to typical funds and strategies.
Alphathena stands at the forefront of this revolution, combining cutting-edge AI with personalized portfolio management to deliver smarter, more efficient investing.
See Alphathena in action. Explore our platform today and discover how direct indexing can redefine your investment strategy.
