Do transaction costs negatively impact the tax benefits from direct indexing? We decided to answer it, once and for all, in our newest white paper: https://lnkd.in/gCES3C8g Fees due to automated trading amount to 0.5% to 1% of harvested capital losses, which are negligible relative to the tax benefits. A cost-benefit analysis based on a $50k deposit generates ~$19.5k in harvested losses and approximate transaction costs of ~$173 for the same period. Interestingly, we saw that timing trades is important with pretty stark differences in transaction costs over the course of the day. It’s best to execute trades towards the end of the day. Continuously improving our algorithms is at the heart of what we do, and we believe in the open dissemination of our research. See our white papers at frec.com/research.
