Question 1

What is direct indexing?

Accepted Answer

Direct indexing is the practice of owning the individual stocks that make up an index or ETF, rather than buying the ETF itself. This eliminates the fund's expense ratio (annual management fee), which can save thousands of dollars over time through compounding.

Question 2

How many stocks do I need to replicate an ETF?

Accepted Answer

Research shows that 15-20 stocks representing the top holdings of a sector ETF achieves R² > 0.95 correlation to the full fund. For broad market ETFs like SPY, 50 stocks achieves R² ≈ 0.97-0.98.

Question 3

How much money do I save by direct indexing?

Accepted Answer

It depends on the ETF. SPY (0.09%/yr) saves $90/yr on $100K — modest. ITA defence ETF (0.40%/yr) saves $400/yr, which compounds to $88,000 over 30 years on a $100K investment.

Question 4

Is direct indexing free?

Accepted Answer

Yes — Direct Index Club is completely free to use. No account required, no signup, no fees. Most major brokers also offer zero-commission stock trading, making the basket itself free to build.

Question 5

What ETFs can I replicate?

Accepted Answer

Direct Index Club currently supports SPY (S&P 500), QQQ (Nasdaq-100), ITA (US Defence), XLV (Healthcare), XLE (Energy), and HACK (Cybersecurity), with more being added.

Ticker	Company	Sector	ETF Weight %
AAPL	Apple	Technology	7.10%
MSFT	Microsoft	Technology	6.20%
NVDA	NVIDIA	Technology	5.80%
AMZN	Amazon	Consumer	3.60%
META	Meta Platforms	Technology	2.50%
GOOGL	Alphabet A	Technology	2.10%
GOOG	Alphabet C	Technology	1.80%
BRK.B	Berkshire Hathaway	Financials	1.70%
LLY	Eli Lilly	Healthcare	1.60%
AVGO	Broadcom	Technology	1.50%
JPM	JPMorgan Chase	Financials	1.40%
TSLA	Tesla	Consumer	1.30%
UNH	UnitedHealth	Healthcare	1.20%
V	Visa	Financials	1.10%
XOM	ExxonMobil	Energy	1.00%

SPY — SPDR S&P 500 ETF