Altruist, a Los Angeles-based fintech firm and digital brokerage platform for RIAs, is launching a direct indexing product with a minimum investment requirement of $2,000.

Altruist announced it will make  Altruist Strategist Suite available through its Model Marketplace during the second quarter. This is the second Altruist-generated model portfolio suite within its Model Marketplace, and the first to include direct indexing.

Direct indexing is an index investing strategy that involves directly purchasing the components of an index at the same weights as the index. Direct indexing can provide greater autonomy, control, and tax advantages to certain investors over owning an index mutual fund or an index exchange-traded fund, according to Altruist. Once reserved for wealthy investors, the rise of zero-commission trading and fractional shares has made direct investing available to smaller investors, according to Investopedia.

“The ability to buy fractional shares is the key to direct indexing with lower minimum investments,” Adam Grealish, Altruists’ head of investments, said in an interview. “Once you have this underlying structure, you can build great portfolios.”

As Altruist’s flagship portfolio suite, the Strategist Suite will provide exposure to global stock and bond markets across a series of risk levels, and will use direct indexing for its U.S. large-cap stock allocation, basing its weight on the 500 largest US stocks, Altruist said. Portfolios also will also be available in a tax-aware version. Advisors using Strategist Suite can access a full support suite of methodology, analysis, and other collateral resources. The portfolios will also be available in a tax-aware version, designed with special consideration for the taxable investor.

Advisors will be able to help clients access direct indexing with as little as $2,000, which Altruist described as “a groundbreaking entry point.”

“This new offering is a major step forward in Altruist’s mission,” Grealish said. “DI is quickly gaining traction, and it represents the future of investment vehicles. By vertically integrating DI and combining it with our fractional share capabilities, we’re making it radically more affordable and accessible for advisors and their clients.”

“Advisors should have everything they need to provide their clients the best financial advice possible,” Jason Wenk, Altruist’s founder and CEO, said in a statement. “As a partner to advisors, we believe in implementing solutions that help them stay ahead of the curve in all facets of their practice. The Altruist Model Marketplace is one avenue to make that happen. Strategist Suite will give advisors access to cutting-edge investment approaches that can significantly benefit their clients.”

Altruist integrates brokerage services and essential practice management software, including the Model Marketplace, into a single digitally-native platform. Advisors can open and fund accounts, invest, manage, report, and bill all in one place. Launched in early 2021 and since expanded, Altruist’s Model Marketplace features portfolios from marquee brands, including Redwood Investment Management and State Street Global Advisors; the Altruist Simplicity series, a free set of models; and now Strategist Suite, Altruist said.

Altruist monitors advisors’ feedback regularly and has received inquiries about direct indexing, which indicates they have gotten inquiries from clients. “In addition, we want to keep advisors aware of the all strategies that can help their clients,” Grealish said.

There are no commissions on the Strategist Suite. There is a 12 basis point fee, plus an additional 2 to 6 basis point fee based on the risk level of the investment, Grealish said. In addition, holding investments directly means losses can be used to offset gains, providing a tax advantage. By buying directly, the portfolio can be customized to the client’s investment goals or philosophical beliefs.

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