# Direct Indexing > Understanding Direct Indexing at Titan Titans Direct Indexing is a separately managed account SMA that gives you direct ownership of individual stocks rat Source: https://help.titan.com/en_us/direct-indexing-rJXHovJGGe Last updated: 2026-06-17T00:36:45.902Z # **Understanding Direct Indexing at Titan** Titan's Direct Indexing is a separately managed account (SMA) that gives you direct ownership of individual stocks, rather than a single fund or ETF, while tracking the S&P 500. Instead of buying one ETF, we buy the underlying stocks on your behalf. This approach unlocks something a traditional fund can't offer: the ability to sell specific positions at a loss to help offset your tax liability, a strategy known as **tax-loss harvesting (TLH)**. **In short:** Direct Indexing can be used as a tax optimization strategy while offering broad market exposure. Read more to understand if this may be a fit for you. * * * ## **Account Details at a Glance** **Minimum investment** $20,000 **Recurring minimum** $500 **Annual fee** 0.40% AUM (standard Titan fee) **Account type** Taxable accounts only **Funding** ACH transfer **Management style** Fully discretionary (advisor-managed) **Note:** Direct Indexing is a separate account from your standard Individual brokerage account at Titan. You cannot make self-direct trades within this account. * * * ## **How Tax-Loss Harvesting (TLH) Works** Tax-loss harvesting involves selling positions that have declined in value to realize a loss. These losses can then be used to offset capital gains elsewhere in your portfolio. Because you own individual stocks (not a fund), specific positions can be sold without liquidating all of the positions within the index. A few important things to understand: * **TLH is tax deferral, not elimination.** Losses harvested today may reduce your tax bill now, but the cost basis of stocks purchased to replace the harvested position may result in higher gains later. * **Benefits are often front-loaded.** The most significant harvesting opportunities typically occur early in the account's life or during periods of market volatility. * **Results depend on market conditions.** In a sustained bull market, there may be fewer opportunities to harvest losses: this is normal and expected. * ** **Direct Indexing involves tracking error risk.** Since the SMA tracks, but does not replicate the S&P 500 exactly, it may underperform the index. ** * * * ## **What to Expect** Your Direct Indexing portfolio is designed to _approximate_ the S&P 500, not replicate it exactly. You should expect some deviation from the index. This is intentional. This occurs because: * The number of individual securities held varies based on account size and may be significantly fewer than the full 500 constituent securities of the S&P 500 * Tax-loss harvesting activity can result in the selling and replacement of positions within the index * Cash flows and rebalancing affect the composition over time **We prioritize tax efficiency over perfect index tracking.** If you're looking for precise S&P 500 replication, a traditional index ETF may be a better fit. Your Titan Wealth Advisor is positioned to provide you with advice on what may be best for you - that’s what they’re here for.  ## **Account Availability** Direct Indexing accounts are currently available as Individual accounts only. Joint accounts aren't supported just yet, the team is actively working on supporting Direct Indexing for joint accounts. If that's something you're interested in, let us know, and we'll reach out as soon as they're available. * * * ## **Wash-Sale Rules** This is one of the most important things to be aware of if you open a Direct Indexing account at Titan. A **wash-sale** occurs when you sell a security at a loss and buy the same or a "substantially identical" security within 30 days before or after the sale. If a wash sale is triggered, the tax deduction from the loss is disallowed. This can happen if you: * Trade the same or substantially identical securities in an outside account (401(k), IRA, or another taxable account) * Are invested in strategies outside of your Direct Indexing account at Titan that contain the same positions as, or substantially identical positions to, the index Wash-sale rules apply at the taxpayer level and are not limited to the Direct Indexing account. Wash-sale rules may apply to trades executed across all accounts under your control or ownership, including but not limited to spousal accounts, IRAs, and accounts maintained at other financial institutions. We work to prevent wash-sales within your Direct Indexing account, but **we cannot see or coordinate with external accounts.** It is your responsibility to be aware of activity in accounts held outside of Titan. If you’re not sure, your Titan Wealth Advisor is happy to review your outside accounts with you. Additionally, we cannot currently coordinate trades between Direct Indexing accounts and the other accounts you or your spouse have at Titan. This means that we may not be able to prevent wash sales from triggering due to Titan activity. However, we have plans to improve this in the future. * * * ## **Exiting the Strategy** Closing your Direct Indexing account may trigger a tax liability from the capital gains on appreciated positions. In some cases, the tax cost of exiting could offset a portion of the tax benefits you received while invested. Please consult a tax advisor before making a decision to close your account. * * * ## **Tax Complexity & Reporting** Direct Indexing generates more tax reporting activity than a simple ETF investment. Each year, you'll receive a detailed 1099-B reflecting individual stock-level transactions. The activity reported on a 1099-B from Direct Indexing is often more complex than what you'd receive from an ETF or mutual fund. If invested in a Direct Indexing account, we recommend working with a CPA or tax advisor, especially at tax time. * * * ## **Your Responsibilities as a Client** To get the most out of Direct Indexing and help ensure accurate tax management, you should: * Provide your Titan Wealth Advisor with accurate tax rate information * Notify your Titan Wealth Advisor if your tax situation changes materially * Avoid trading securities that are within the S&P 500 in outside accounts that could trigger wash sales * Consult a qualified tax advisor for personalized tax guidance - your Titan Wealth Advisor does not provide tax, legal, or accounting advice ## **Disclosures** Tax-loss harvesting is not appropriate for all investors, and tax benefits are not guaranteed. Results will vary based on market conditions, contribution timing, and your individual tax situation. This article is for informational purposes only and does not constitute investment, tax, legal, or accounting advice. Please consult a qualified professional regarding your specific circumstances. All investments involve risks, including the potential loss of principal. Titan Global Capital Management USA LLC is an SEC-registered investment adviser. For more information, see [**Direct Indexing Risks and Disclosures**](https://cdn.titan.com/disclosures/Direct_Indexing_Risks_and_Disclosures.pdf).