Build-Your-Own-Index Boom Could Hit $825 Billion in Four Years

Direct-indexing assets to grow faster than ETFs: Cerulli
Wall Street has spent billions on M&A to tap into the trend

Direct indexing “allows advisors to customize at scale because they can do some clicks with a button and implement ESG, take away certain stocks, et cetera,” Jamie Catherwood, O’Shaughnessy Asset Management client portfolio specialist, said on the Dec. 5 episode of “Bloomberg ETF IQ.” Franklin Resources bought O’Shaughnessy in September 2021 for its custom-indexing business known as Canvas.Source: Bloomberg

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By Katie Greifeld

December 6, 2022 at 6:08 PM UTC

This article is for subscribers only.

An index strategy that’s all about customization is expected to grow faster than other investment vehicles over the next four years as investors’ desire for personalization intensifies.

Cerulli Associates expects assets in so-called direct indexing to climb to $825 billion by 2026 from roughly $462 billion now, according to the research shop’s new paper sponsored by direct-indexing provider Parametric Portfolio Associates. That’s a five-year compound annual growth rate of 12.3%, exceeding growth forecasts for exchange-traded funds, mutual funds and separately managed accounts.