Boston-based Smartleaf announced on Thursday a partnership with IDX Insights to offer its clients access to additional equity direct indexing models.

IDX Insights, an index strategist specializing in factor research and hedge fund replication, will enable Smartleaf clients to offer the end investor alternatives to costly actively managed models, ETFs and mutual funds, according to a Smartleaf news release.

"IDX Insights is an industry leader in the generation of sophisticated tracking and factor-based index models. We are thrilled to be partnering with IDX to expand our direct index offering," said Jerry Michael, Smartleaf's president, in comments released on Thursday. "Through our partnership with IDX, we will enable our clients to leverage direct indexing to lower costs and increase after-tax expected returns, while offering investors greater customization options."

Smartleaf’s direct-index portfolios are tax optimized and enable clients to apply security, sector and ESG screens. They also make it easier to transition and onboard clients in an efficient manner. The firm claims its platform can help advisors both move downstream by offering fractional share, dollar-cost investing to smaller accounts, and upstream by offering deep customization and tax optimization. Currently, Smartleaf clients manage about $50 billion in client assets on its platform.

The partnership launches with US large-cap high dividend, mid-cap and small-/mid-cap(SMID) index models and ADR-based foreign models, with each index containing approximately 50 stocks. The large-, mid- and SMID- models offer market-cap exposure to broad indexes of stocks in each size category. The ADR models are intended to track international developed stock indexes.

The first set of indexes will be available to Smartleaf clients in the second quarter of 2020

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