The investment landscape is experiencing a pivotal transformation as passive strategies gain ground over traditional active management. At the heart of this shift is the rise of direct indexing—an innovative approach that merges the cost-efficiency of passive investing with a new layer of customization. What was once a market dominated by low-cost ETFs tracking broad indices is now evolving toward personalized portfolios that incorporate tax optimization, individual values, and specific risk tolerances.
Within this context, a long/short strategy, traditionally associated with enhanced alpha generation, is being reconsidered. Its potential as a tax-efficient, beta-neutral solution is drawing attention from advisors and investors seeking long-term, sustainable strategies in a post-alpha-chasing era. This paper explores how the use of ETFs within a long/short direct indexing framework may deliver market returns while offering potential tax benefits and simplified operational logistics.
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