Asset managers are acquiring fintech partners to capitalise on the surge in client interest in tax reductions and customised portfolios.

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Investment firms are racing to provide access to direct indexing (DI) — a way of creating bespoke indices for individual clients — as demand rises for portfolios that are more personalised and tax efficient. DI was previously restricted to affluent clients and their wealth managers, due to the higher costs involved. But, recently, developments in technology have brought customisable indices to a broader customer base. Firms are rushing in, acquiring new fintech partners and building out their DI offerings. “There is a bit of a race on at the moment,” says Daniel Needham, president of wealth management at Morningstar. The index group purchased direct-indexing specialist Moorgate Benchmarks in September, following in the footsteps of other industry titans such as Vanguard, BlackRock and Morgan Stanley.

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