Custom Indexing starts with the selection of a target investment mandate that aligns most closely with your values, goals, and objections. With an objective established, we have the ability to customize the portfolio across a wide array of options including tax transitioning, setting capital gains budgets, applying values-based screens or security restrictions, among a number of other options.

Beyond the construction of a bespoke portfolio, custom indexing offers tangible after-tax benefits to our clients. Owning the underlying constituents of an index allows our team to routinely tax-loss harvest throughout the year. In a recent study⁽¹⁾, Morningstar estimates that deploying tax-loss harvesting within a U.S. stock portfolio from 1999 through 2022 would have added over 1% of additional after-tax return per year compared to a static index tracking portfolio – such as an index ETF or mutual fund.

Once only accessible to large institutions and ultra-high net-worth individuals, vast improvements in technology in recent years have brought this solution to a broader swath of investors. Stonebrook Private is proud to incorporate custom indexing in our investment strategy, for both equity and fixed income mandates.

(1)Straehl, P., & Kunzweiler, A. (2022). Sizing up the Potential Tax Benefits of Direct Indexing [White paper]. Morningstar. https://mp.morningstar.com/en-us/lp/sizing-up-the-tax-benefits-of-direct-indexing