Why Direct Indexing? | Index One

Why Direct Indexing? | Index One

In this edition of Index One Insights by Index One , we discuss why advisors should consider direct indexing strategies in their portfolios.


Also in this edition:

  • What alternative to the 60/40 strategy do you consider most appealing?
  • Brompton Funds' Income-Oriented ETF Innovations
  • PMV Downside Defender Indices
  • Index Spotlight


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Why Direct Indexing? | Index One


The current boom of direct indexing is an illustration of the ongoing democratization of investment options for a broader spectrum of investors.

  • Index investors are increasingly interested in gaining some control and autonomy over their portfolios, self-replicating indexes that were previously only possible via index mutual funds or index ETFs.

  • Direct indexing decreases tracking error, or the difference in returns between an index fund and its benchmark index.
  • Direct indexing also enables investors to slightly overweight or underweight certain assets or sectors compared to the index weightings according to their risk appetite, conviction, or other preferences.

READ MORE: What's so special about Direct Indexing? | Index One


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What alternative to the 60/40 strategy do you consider most appealing?

Concerns about the sustainability of the traditional 60/40 portfolio have emerged, suggesting that investors might consider incorporating alternative investments into their strategies. To curb volatility and enhance potential risk-adjusted returns, investors are rethinking their strategic asset allocation frameworks to include more alternatives in their portfolios. What alternative to the 60/40 strategy do you consider most appealing?

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The Globe and Mail: ETF Issuer Spotlight: Brompton Funds' Income-Oriented ETF Innovations

“The firm’s equity ETF offerings provide growth potential through exposure to actively managed portfolios of global equities and/or of equities of specific high-growth industries. Their equity ETFs employ active covered call strategies to increase portfolio income and lower portfolio volatility.

“Furthermore, their fixed-income strategies are actively managed and focus on alternative fixed-income asset classes with proven track records that are not easily available in Canada.”

Read more


Brompton Canadian Cash Flow Kings ETF (Ticker: KNGC)

This ETF seeks to replicate the performance of the Brompton Index One Canadian Cash Flow Kings Index (“Canadian Index”). The Canadian Index uses a rules-based methodology to gain exposure to shares of Canadian publicly-listed companies with the highest Free Cash Flow Yields.

Brompton U.S. Cash Flow Kings ETF (Ticker: KNGU)

This ETF seeks to replicate the performance of the Brompton Index One U.S. Cash Flow Kings Index (“U.S. Index”). The U.S. Index uses a rules-based methodology to gain exposure to shares of U.S. publicly-listed companies with the highest Free Cash Flow Yields.

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PMV Downside Defender Indices

The PMV Downside Defender Indices aim to minimize downside risks by maximizing the diversification benefits of a multi-asset strategy. The indices track a strategy that combines core and tactical allocations to various stock, bond, commodity, and currency markets.

Each index includes a core weighting to US Large Cap equity, Long-Term US Treasuries, and Gold.


Additionally, tactical weightings are made using a quantitative process that identifies momentum trends in the following asset classes: US Large Cap equity, International Developed equity, Emerging Markets equity, US T-bills, Long-Term US Treasuries, gold, commodities, and bullish US Dollar currency.


View PMV Downside Defender Indices


Index Spotlight

Popular indices calculated by Index One. As of 28th June 2024.

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