Fidelity Readies Retail Direct Indexing Product

Fidelity Investments has filed with the Securities and Exchange Commission to offer a direct indexing product with a $5,000 minimum investment. The product, called Fidelity Managed FidFolios, is in pilot but is expected to be available to all investors “in the coming months,” according to a story in Think Advisor news. The product will initially offer three different strategies — U.S. Large Cap Index, International Index and Environmental Focus — that investors can customize, with some limitations, by removing individual stocks or industries from those indexes. The Program is designed for clients who seek a personalized and professionally managed stock portfolio facilitated by a digital experience,” according to the SEC filing. Direct indexing involves buying the individual stocks that make up an index, adjusting their weights or eliminating some to align with investors’ preferences. The strategy also makes it easier for investors to harvest tax losses that can offset capital gains. The Fidelity Managed FidFolios combines direct indexing with fractional share trading, which allows clients to allocate assets among multiple positions based on dollar amount rather than share size, according to the SEC filing.