What is direct indexing?

Direct indexing is an investment strategy where you buy the individual stocks that make up an index or ETF instead of buying the fund itself. This eliminates the fund's annual expense ratio and gives you full control over which stocks you hold, enabling tax-loss harvesting and portfolio customization.

Is direct indexing better than ETFs?

It depends on your situation. Direct indexing is better if you have $25K+ invested, pay more than 0.20%/yr in ETF fees, want tax-loss harvesting, or need portfolio customization. ETFs are better for smaller portfolios, ultra-low-cost funds like VTI (0.03%), or investors who prefer zero maintenance.

How much does ETF expense ratio cost over time?

ETF fees compound against you over time. On a $100,000 portfolio at 7% annual growth, a 0.40% expense ratio costs over $81,000 in lost returns over 30 years. Even a 0.09% fee (SPY) costs about $19,000 over the same period. Direct indexing eliminates this cost entirely.

What is tax-loss harvesting and how does it work?

Tax-loss harvesting is selling investments at a loss to offset capital gains taxes. With direct indexing, you own stocks individually, so you can sell losers to harvest losses while keeping winners. ETF holders cannot do this because they own one bundled security. High-income investors in taxable accounts benefit most.

Who is direct indexing suitable for?

Direct indexing is best suited for investors with $25,000 or more in taxable brokerage accounts, those paying 0.20%+ in ETF expense ratios, high-income earners who benefit from tax-loss harvesting, and anyone who wants to exclude or overweight specific stocks for personal or ESG reasons.

What is the difference between an index fund and direct indexing?

An index fund (ETF or mutual fund) pools investor money to buy all stocks in an index, charging an annual expense ratio. Direct indexing means you buy the individual stocks yourself, paying no ongoing fees. You get similar market exposure but with added benefits: zero expense ratio, tax-loss harvesting on individual positions, and full control to customize holdings.

← All ETFs

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HACK — ETFMG Prime Cyber Security ETF

Tracks cybersecurity companies — network security, endpoint protection, identity.

Expense ratio: 0.6%/yr

SPY QQQ VTI VXUS SCHD ITA XLV XLE HACK

Holdings

Ticker	Company	Sector	ETF Weight %
PANW	Palo Alto Networks	Network Security	8.50%
CRWD	CrowdStrike	Endpoint Security	7.90%
FTNT	Fortinet	Network Security	6.80%
ZS	Zscaler	Cloud Security	5.40%
S	SentinelOne	Endpoint Security	4.90%
CYBR	CyberArk	Identity Security	4.20%
OKTA	Okta	Identity Security	3.80%
RPD	Rapid7	Vulnerability Mgmt	3.50%
TENB	Tenable	Vulnerability Mgmt	3.10%
VRNT	Verint Systems	Analytics	2.80%
QLYS	Qualys	Cloud Security	2.50%
SAIL	SailPoint	Identity Security	2.20%
NTCT	NetScout Systems	Network Security	2.00%
PFPT	Proofpoint	Email Security	1.90%
CACI	CACI International	Defence IT	1.70%

Basket Stats

Coverage100%

Est. R²0.990

✅ 15 stocks — good tracking (R² target met)

Portfolio size ($)

Annual savings$300

10-yr compounded$5,378

20-yr compounded$20,581

Buy List — $50,000 portfolio

Ticker	Company	Allocation %	Buy Amount
PANW	Palo Alto Networks	13.9%	$6,944
CRWD	CrowdStrike	12.9%	$6,454
FTNT	Fortinet	11.1%	$5,556
ZS	Zscaler	8.8%	$4,412
S	SentinelOne	8.0%	$4,003
CYBR	CyberArk	6.9%	$3,431
OKTA	Okta	6.2%	$3,105
RPD	Rapid7	5.7%	$2,859
TENB	Tenable	5.1%	$2,533
VRNT	Verint Systems	4.6%	$2,288
QLYS	Qualys	4.1%	$2,042
SAIL	SailPoint	3.6%	$1,797
NTCT	NetScout Systems	3.3%	$1,634
PFPT	Proofpoint	3.1%	$1,552
CACI	CACI International	2.8%	$1,389
Total			$50,000

💡 Use fractional shares at brokers like Fidelity, Schwab, or Interactive Brokers to hit these exact allocations.