US direct indexing goes mainstream

US direct indexing goes mainstream – opportunities for Aussie investors

For decades, globally diversified investors have looked to the United States to anchor their international equity exposure. The sheer scale of the US market makes it impossible to ignore – and today, new technology is opening up a more powerful way to access it.

Why US equities matter

As of 31 July 2025, US equities represented more than 72% of the Developed Market equity universe. That dominance means the performance of US stocks largely sets the tone for global equity markets. For Australian investors seeking diversified international exposure, US equities are the natural starting point – and increasingly, they are becoming the proving ground for the most innovative investment structures.

Direct indexing – the fastest-growing investment product in the US

Direct indexing is no longer a niche investment approach. In the US, it has emerged as the fastest-growing financial product, with assets under management skyrocketing to $864 billion USD in 2024. This trajectory outpaces even ETFs, highlighting a fundamental shift: investors want efficient market exposure and personalisation, not just pooled ETFs and managed funds.

For Australian advisers, wealth managers, and family offices, the rise of direct indexing in US equities offers an early glimpse into where client demand is headed.

From one-size-fits-all to personalisation at scale

ETFs have long been the go-to tool for efficient market exposure. But they’re blunt instruments. Direct indexing replaces the fund wrapper with ownership of the underlying stocks, allowing investors to replicate an index while tailoring their portfolio to their own needs.

That flexibility unlocks powerful applications:

• ESG alignment – removing securities, industries or sectors to reflect values.

• Tax strategies – harvesting losses to offset gains, optimising for after-tax returns.

• Concentration management – reducing exposure where clients already hold significant securities elsewhere.

For Australian investors increasingly prioritising sustainability, control, transparency, and after-tax outcomes, these factors are reshaping portfolio construction - giving advisers and investors who embrace them a clear strategic edge.

Tax efficiency – a clear differentiator

One of direct indexing’s strongest appeals is helping investors manage for after tax performance by allowing for precise control over individual securities. Because investors directly own the underlying stocks, portfolios can be adjusted to manage capital gains and losses in a way pooled vehicles such as an ETF and managed fund simple cannot.

For Australians – where after-tax outcomes drive long-term wealth creation, this means more than marginal gains. It’s the difference between “index performance” and index performance optimised for the individual.

Technology is the enabler

Until recently, direct indexing was the preserve of ultra-high-net-worth individuals, with customisation too complex and costly for most. That’s changing rapidly. Advances in portfolio management innovation, low brokerage costs and material enhancements in technology have democratised access for the masses.

Briefcase is at the forefront of this shift in Australia, offering institutional-grade direct indexing solutions that advisers can use to deliver custom portfolios at scale.

A more engaged investor experience

Direct indexing doesn’t just deliver personalisation and potential performance benefits – it changes the investor relationship. With full transparency, direct ownership of shares, and retained voting rights, clients gain a more meaningful connection to their investments. For family offices, high-net-worth individuals, and values-driven clients, this deepens trust and engagement.

What it means for Australia

The US experience shows where the market is headed. For Australian investors and their advisers, the question is no longer if direct indexing will take hold, but how fast.

With US equities as the cornerstone of global equity exposure, direct indexing provides the ideal entry point – combining scale, efficiency, and customisation. For advisers, it offers a way to differentiate, deliver a personalised client experience, and build deeper client relationships.

At Briefcase, we believe direct indexing represents the next evolution of wealth management in Australia. The opportunity is here – and it starts with the world’s most influential equity market.

US direct indexing goes mainstream – and what it means for Australian investors

US equities now account for 65% of the All World Country Index, covering both Developed and Emerging market equities, making them the anchor of global equity exposure. But how investors access this exposure is changing fast.

Why has Direct Indexing growth exploded in the United States? Personalisation, transparency, and after-tax efficiency – all delivered at scale thanks to advances in technology.

For Australian advisers, family offices and investors, this is more than a trend. It’s a structural shift that opens the door to:

• Customisation of portfolios for ESG, tax, and concentration management.

• After-tax optimisation not possible through pooled ETFs and managed funds.

• Deeper client engagement through direct ownership and retained voting rights.

At Briefcase, we believe direct indexing represents the next evolution of wealth management in Australia. The opportunity is clear – and it starts with the world’s most influential equity market.