What is a Compact Index, and what is Compact DI?

Our Compact DI proprietary algorithm can replicate virtually any index with as few as 22 stocks while maintaining diversification...and arguably even more diversification than the selected index itself!

How it Works

Fewer holdings mean fewer...

Trades

• Even though trading commissions have been reduced significantly and may be zero depending on the firm, the difference in the bid-ask spread can add considerably to trading costs. Creators of the underlying indexes (S&P, MSCI, Russell, etc.), periodically add or delete issues to meet their mandates. The typical Direct indexer who holds 200+ stocks must rebalance their portfolios to match, creating possible unwanted commissions, taxable events, and subsequently reducing returns.

Tax Issues

• The downside to owning hundreds of individual stocks is that each will have its cost basis, dividends, and profit and loss, which could become burdensome at tax time. 

Proxy Issues

•  Whether responded to by the client or the Advisor, 200 securities can pose a daunting task - 22 is better!

Client Issues

• Fewer stocks mean fewer questions about the portfolio. "Why do we own XYZ?", "Why do we own so many stocks"? "Why are these 13 stocks down?" Fewer stocks mean fewer headaches and more time to devote to the important business of running your practice.

Even the most sophisticated investor... 

A friend who is an Advisor to a $10 million Family Office recently had a call from his retired business owner client asking "Why do I own so damn many stocks?"

Achieve true diversification

It should be obvious from the name of our company - Global Macro Asset Management, but we believe true diversification is reflected in a global portfolio. To achieve that other direct index providers would require a portfolio of 300+ stocks. The Compact DI Global Portfolio, a combination of our US Core and International Developed portfolios is diversified amongst 11 economic sectors, and 11 countries, yet holds only 33 securities.