The biggest names in asset management are preparing for a major shift to an era when investors demand customised equity portfolios that have traditionally been the preserve of wealthier clients.
Vanguard, JPMorgan, BlackRock and Morgan Stanley have all done deals since 2020 to bolster their offerings in so-called direct indexing — a more bespoke approach to off-the-shelf investment products. Fund managers expect this will mark the next stage in the democratisation of finance, and will probably put pressure on traditional products such as mutual funds and exchange traded products.
By the middle of this decade, direct indexing is forecast to account for $1.5tn of global assets, up from less than $500bn now, “by taking share from other passive products such as mutual funds and ETFs”, according to a recent report from Morgan Stanley and Oliver Wyman.