We found 11 online brokers that are appropriate for Trading Brokers.
Direct indexing is the next big feature in the financial industry. It is in fact being considered as the future of investing. Throughout this article, we will be discussing direct indexing in detail.
Before we move on to the direct indexing component let us first have a brief look at an index ETF or mutual funds.
These are benchmark components of a market in a bundled product. Let's say there are about 500 major companies in the S&P 500 index and similarly 30 stocks baskets are found in a Dow Jones ETF with respect to price.
Now, an investor who has these funds may gain the same experience and this is the reason we have seen mushrooming of ETFs and index funds in recent years as these are tax-efficient and incurs lower costs.
Furthermore, these ETFs and index funds help in diversification and performance.
Assume that an investor is an employee of Amazon, which is currently one of the top five companies in the S&P 500. This concept didn't work for Lehman Brothers and Enron employees.
Under direct indexing, one can own S&P 500 but without including the above-mentioned stocks. In other terms, it is a customized index creation.
With direct indexing, a trader can further tailor the choice such as the index of low-cost.
The customization can further go deeper like taking advantage of tax and enhancing returns. A trader can sell the losing positions and take more such steps to gain more.
Direct indexing is the best for those who are retiring as they can sell such holdings which have the least tax impact.
The new financial investing concept helps in avoiding capital gains distributions inherent in ETFs and mutual funds. This is never possible in mutual funds and to some extent in the ETF.
Investors who have low income can harvest some individual stock gains and pay lower taxes.
Even though direct indexing seems a new concept it has been in existence for decades in the same way as managed accounts, but then was only available to institutional investors.
Today, with the development of technology it is available to the mass investors.
However, there are some obstacles before direct indexing will reach the masses. Brokerage firms charge commissions of purchase or sale of stocks.
There is one more hurdle. Investors cannot buy fractional shares.
It is well debated whether direct indexing is an active management in disguise. Yes, it can be considered to some extent as the exclusion part offers an experience of investment deviation from the index.
It is also much talked about whether the behavior of an investor would be better or worse. If not, would the behavior be both better and worst simultaneously?
Customization reciprocating better behavior while emotional attachment could result in worse behavior.
Direct indexing is just a click of a button away for including or removing stocks. It is proposed to avoid including and excluding under emotional behaviors.
While discussing a question may arise as to how much cost could be incurred in direct indexing. Frankly, the costs are not clear.
Investors need to pay a bid/ask spread for each buy or sell. Even though the spreads are in pennies, these can keep on adding over time with transactions piling up while excluding or including stocks.
Next comes the tax benefits. The argument hinges on tax alpha but it is important to know that only taxable accounts would be taxed.
This is the reason investors basically chooses nontaxable accounts.
However, it is to understand that tax alpha creation is based on the performance of the overall market. In up market, there is minimum lose while in the down market there is a greater chance of loss.
It is undoubtedly said that direct indexing is the future of the investment landscape. Asset management is gradually becoming commoditized and hence the call of show value is becoming stressful among investment managers.
Investment advisors get a chance to know specific wishes, fears, and desires of clients. Then again, they also fear that clients may switch over to other advisors.
Direct indexing is one of the best features in recent years and has both pros as well as cons. It is considered as the foreseeable future of the financial industry.
It is best for investors who believe in customizing the portfolio. Direct indexing offers the benefit of excluding and including stocks as wished or desired.
We discussed above in detail, but it is always suggested to opt for tax benefit and low-cost fees while opting for direct indexing to save more on returns. It is best for individuals in retirement.
We've collected thousands of datapoints and written a guide to help you find the best Direct Indexing for you. We hope this guide helps you find a reputable broker that matches what you need. We list the what we think are the best Brokers below. You can go straight to the broker list here.
There are a number of important factors to consider when picking an online Brokers trading brokerage.
Our team have listed brokers that match your criteria for you below. All brokerage data has been summarised into a comparison table. Scroll down.
We compare these features to make it easier for you to make a more informed choice.
Here are the top Brokers.
Compare Brokers min deposits, regulation, headquarters, benefits, funding methods and fees side by side.
All brokers below are Brokers. Learn more about what they offer below.
You can scroll left and right on the comparison table below to see more Brokers that accept Brokers clients
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eToro
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IC Markets
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XTB
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AvaTrade
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FP Markets
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Trading212
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Plus500
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Pepperstone
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EasyMarkets
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XM
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FXPrimus
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Regulation | Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC), Markets In Financial Instruments Directive (MiFID), Australian Securities and Investments Commission (ASIC) | Australian Securities and Investments Commission (ASIC), Financial Services Authority (FSA), Cyprus Securities and Exchange Commission (CySEC) | Financial Conduct Authority (FCA), FCA number FRN 522157, Cyprus Securities and Exchange Commission (CySEC), CySEC Licence Number: 169/12, Comisión Nacional del Mercado de Valores, Komisja Nadzoru Finansowego, Belize International Financial Services Commission (IFSC) under license number IFSC/60/413/TS/19, Polish Securities and Exchange Commission (KPWiG) | Central Bank of Ireland, Australian Securities and Investments Commission (ASIC), Financial Services Authority (FSA), South African Financial Sector Conduct Authority (FSCA), Financial Stability Board (FSB), Abu Dhabi Global Markets (ADGM), Financial Regulatory Services Authority (FRSA), British Virgin Islands Financial Services Commission (BVI) | Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC) | Financial Conduct Authority (FCA), Financial Supervision Commission (FSC) | Plus500UK Ltd authorized & regulated by the FCA (#509909), Plus500CY Ltd authorized & regulated by CySEC (#250/14), Plus500AU Pty Ltd (ACN 153301681), ASIC in Australia AFSL #417727, FMA in New Zealand, FSP #486026 and Authorised Financial Services Provider in South Africa FSP #47546 | Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Federal Financial Supervisory Authority (BaFin), Dubai Financial Services Authority (DFSA), Capital Markets Authority of Kenya (CMA), Pepperstone Markets Limited is incorporated in The Bahamas (number 177174 B), Licensed by the Securities Commission of the Bahamas (SCB) number SIA-F217 | Cyprus Securities and Exchange Commission (CySEC), Australian Securities and Investments Commission (ASIC) | International Financial Services Commission (IFSC), Cyprus Securities and Exchange Commission (CySEC), Australian Securities and Investments Commission (ASIC) | Cyprus Securities and Exchange Commission (CySEC), Markets In Financial Instruments Directive (MiFID) |
Min Deposit | 200 | 200 | No minimum deposit | 250 | 100 | 1 | 100 | 200 | 100 | 5 | 100 |
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Used By | 17,000,000+ | 180,000+ | 250,000+ | 200,000+ | 10,000+ | 14,000,000+ | 15,500+ | 10,000+ | 142,500+ | 70,000+ | 10,000+ |
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Platforms | Web Trader, Tablet & Mobile apps | MT4, MT5, Mirror Trader, ZuluTrade, Web Trader, cTrader, Mac | MT4, Mirror Trader, Web Trader, Tablet & Mobile apps | Web Trader, MT4, MT5, AvaTradeGo, AvaOptions, Mac, Mobile Apps, ZuluTrade, DupliTrade, MQL5 | MT4, MT5, IRESS, Mac, Web Trader, Tablet & Mobile apps | Web Trader, Tablet & Mobile apps | Web Trader, Tablet & Mobile apps | MT4, MT5, Mac, ZuluTrade, Web Trader, cTrader, Tablet & Mobile apps | MT4, Web Trader, Tablet & Mobile apps | MT4, MT5, Mac, Web Trader, Tablet & Mobile apps | MT4, Mac, Mirror Trader, Web Trader, Tablet & Mobile apps |
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Up with fxprimus |
Risk Warning | 67% of retail investor accounts lose money when trading CFDs with this provider. | Losses can exceed deposits | 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. | 72% of retail investor accounts lose money when trading CFDs with this provider | Losses can exceed deposits | CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. | 76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. | CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.3% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money | Your capital is at risk | Your capital is at risk | Losses can exceed deposits |
Demo |
eToro Demo |
IC Markets Demo |
XTB Demo |
AvaTrade Demo |
FP Markets Demo |
Trading 212 Demo |
Plus500 Demo |
Pepperstone Demo |
easyMarkets Demo |
XM Demo |
FXPrimus Demo |
Excluded Countries | IR, KP, BE, CA, JP, SY, TR, IL, BY, AL, MD, MK, RS, GN, CD, SD, ZW, ET, GH, TZ, LY, UG, ZM, BW, RW, TN, SO, NA, TG, SL, LR, GM, DJ, CI, PK, BN, TW, WS, NP, SG, VI, TM, TJ, UZ, LK, TT, HT, MM, BT, MH, MV, KZ, GD, FJ, BB, BM, BS, AG, AI, AW, LB, SV, US, PY, HN, GT, PR, NI, VG, AN, | AF, GN, SL, BW, IR, SY, MM, IQ, TG, KH, LS, YE, CI , LR, ZW, CU, LY, TZ, CG, ML, BO, LR, NE, AO, GM, NG, AG, GH, KR, KG, GN, SN, NA | US, IN, PK, BD, NG , ID, BE | BE, BR, KP, NZ, TR, US, CA, SG | US, JP, NZ | US | MY, BE, US, CA, CN, ID, PH, TG, NG, DO, MA, ZW, PR, TZ, TN, UG, BW, AO, AE | BR, KR, IR, IQ, SY, JP, US | US | US, CA, IL, KR, IR, MM, CU, SD, SY | AF, CI, CU, IQ, IR, LY, MM, KR, SD, PR, US, AU, SY, DZ, JP, EC. |
You can compare Brokers ratings, min deposits what the the broker offers, funding methods, platforms, spread types, customer support options, regulation and account types side by side.
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We have listed top Brokers below.