About
Frec democratizes sophisticated investing strategies that were previously reserved for ultra-high-net-worth clients of firms like Goldman Sachs or Morgan Stanley. At its core, Frec offers direct indexing — rather than buying an ETF, users own the individual stocks that make up an index, enabling the platform to automatically harvest tax losses on a stock-by-stock basis and shield future tax bills. Frec's Classic Direct Indexing tracks major indices like the Russell 1000 with fees as low as 0.09%, requiring zero active effort from the investor. For those seeking more aggressive tax alpha, Long Short Direct Indexing — historically gated behind $1M minimums at hedge funds — is now available to all Frec users. The Frec Diversify product helps investors with concentrated stock positions (e.g., from RSUs or employee stock plans) transition into a diversified index over time while minimizing the capital-gains tax hit. Additional products include a Portfolio Line of Credit and Treasury, which earns high interest on uninvested cash. Funds are custodied in users' own names at Apex Clearing, which holds over $200B in assets, and Frec is SEC-registered and a fiduciary, managing over $800M in assets. The platform is designed to be as simple as investing in an ETF while delivering meaningful after-tax outperformance — ideal for tech professionals, angel investors, and anyone with taxable brokerage accounts looking to keep more of their returns.
Key Features
- Classic Direct Indexing: Own the individual stocks of a market index directly, enabling automatic tax-loss harvesting at the stock level with fees as low as 0.09%.
- Long Short Direct Indexing: Access hedge-fund-style long-short strategies previously requiring $1M minimums — now available to all Frec investors for amplified tax alpha.
- Frec Diversify: Gradually transition concentrated stock positions (e.g., from RSUs or options) into a diversified index with minimal capital-gains tax impact.
- Automated Tax-Loss Harvesting: The platform continuously scans your portfolio for tax-loss harvesting opportunities, shielding future tax bills with zero manual effort required.
- Treasury & Portfolio Line of Credit: Earn high interest on uninvested cash via Frec Treasury and borrow against your portfolio with a flexible line of credit.
Use Cases
- Tech employees with large RSU or stock option positions looking to diversify into an index without triggering a large capital-gains tax event.
- Angel investors and high earners with significant taxable brokerage accounts seeking to reduce their annual tax burden through automated tax-loss harvesting.
- Passive investors who currently hold ETFs and want to upgrade to a more tax-efficient structure without adding complexity or management overhead.
- Individuals transitioning out of actively managed portfolios who want low-cost, index-tracking exposure with built-in tax optimization.
- Investors seeking institutional-grade strategies like long-short direct indexing without the $1M+ minimums traditionally required by hedge funds.
Pros
- Ultra-Low Fees: Fees starting at 0.09% make direct indexing accessible without needing a wealth manager charging 1%+ annually.
- Meaningful After-Tax Outperformance: Direct indexing can grow your portfolio by an additional ~1.34% per year net of fees compared to a standard ETF, based on Russell 1000 modeling.
- Institutional Strategies, Democratized: Products like long-short direct indexing were previously exclusive to hedge fund clients; Frec makes them available to any investor.
- Custodial Safety: Assets are held in your name at Apex Clearing ($200B+ AUM), with SIPC membership and SEC-registered fiduciary status.
Cons
- US-Only Platform: Frec is currently only available to US-based investors, limiting its global accessibility.
- Taxable Accounts Only: Tax-loss harvesting benefits are only applicable to taxable brokerage accounts; the strategy offers no advantage for IRAs or 401(k)s.
- Narrowly Focused Product Suite: Frec is purpose-built for passive index investing and tax optimization — it is not a full-service brokerage for active trading or options.
Frequently Asked Questions
What is direct indexing and how is it different from buying an ETF?
Direct indexing means you own the individual stocks that make up an index (like the S&P 500) directly in your account, rather than through a fund. This allows Frec to sell losing positions individually to harvest tax losses, which an ETF cannot do.
How much does Frec cost?
Frec's fees start as low as 0.09% annually, significantly lower than the 0.5%–1%+ typically charged by human wealth advisors offering similar strategies.
Is my money safe with Frec?
Yes. Frec is SEC-registered, a fiduciary, and a member of SIPC. Your funds are held in your name at Apex Clearing, one of the largest US custodians with over $200B in assets.
What is Frec Diversify?
Frec Diversify is a product for investors holding large concentrated stock positions (e.g., from company RSUs). It helps you transition those stocks into a diversified index gradually, minimizing the capital-gains tax you'd owe if you sold everything at once.
What is long-short direct indexing?
Long-short direct indexing allows you to go long on stocks expected to outperform and short on stocks expected to underperform within an index, generating more tax-loss harvesting opportunities. It was previously only available through hedge funds with $1M+ minimums.
