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 %
XOM	ExxonMobil	Oil & Gas	23.40%
CVX	Chevron	Oil & Gas	16.80%
EOG	EOG Resources	Exploration	5.20%
COP	ConocoPhillips	Oil & Gas	5.10%
SLB	SLB (Schlumberger)	Oilfield Services	4.80%
MPC	Marathon Petroleum	Refining	4.20%
OXY	Occidental Petroleum	Oil & Gas	3.80%
PXD	Pioneer Natural Resources	Exploration	3.50%
PSX	Phillips 66	Refining	3.30%
HES	Hess Corporation	Oil & Gas	2.90%
VLO	Valero Energy	Refining	2.80%
WMB	Williams Companies	Pipeline	2.40%
KMI	Kinder Morgan	Pipeline	2.10%
DVN	Devon Energy	Exploration	1.90%
HAL	Halliburton	Oilfield Services	1.80%

XLE — Energy Select Sector SPDR