799 karma · joined March 22, 2009
I have tried out V1 and while it's a bit barebones, the planned features like 'Autocontext' and 'Local-RAG' sound promising. Devil's in the implementation details though.
We believe that in most ETFs right now the transaction costs are largely factored into either the expense ratio or the ETF bid-ask spread, exactly due to the redemption mechanism you discussed. See section titled Spread of the Underlying Securities in an ETF Basket in the following PDF and the following quote:
"If a market maker has to obtain a portion of the ETF constituents on the secondary market to then deliver into the fund as part of the basket process, the cost of acquiring those names should be reflected in the ETFs bid/ask spread — as costs are traditionally passed through to the end customer."
https://www.ssga.com/library-content/pdfs/etf/au/spdr-au-etf...
Also we take estimated spread costs into account when running our portfolio optimization. A higher bid-ask spread as measured by past 1 month NBBO p50 spread generally gets penalized in our portfolio optimization all else being equal, although this depends slightly on what optimization setting you've chosen on Double.
But there are some benefits to doing what you refer to as a "custom one-off fund". Namely we can Tax Loss Harvest any losses and realize those to offset gains we realize in the name of rebalancing. The industry generally calls this direct indexing and wealth clients with $1M and above portfolios have been doing it for years.
We also provide the option of entering a "Buy & Hold" optimization for strategies, which would not rebalance your winners into losers and realizing any gains or losses, but your portfolio will drift over time if you choose this.
We do not hold any funds ourselves. You connect your bank and ach/wire money to an Apex bank account. You can verify your holdings via apex anytime (see: https://help.double.finance/en/articles/10262406-how-can-i-v...)
We take into account tax rates while optimizing your account. You can also chose to put your strategy in Buy & Hold which will never sell anything thus never realize any cap gains.
SIPC protection covers against a brokerage firm failing, which in our case is Apex Clearing. We are not currently a brokerage so SIPC would not apply if Double goes bankrupt.
We currently have 50+ strategies. About 30 of these replicate popular ETFs. MTUM is one of them (https://double.finance/p/explore/124). Here are our 4 factor focused portfolios (https://double.finance/p/explore/factor-thesis). If there are more you want to see please let us know as we can most likely add them.
MIDU is unfortunately not eligible to be traded on a fractional basis by Apex. Main things missing are some new/low volume ETFs and ADRs (although we have some of them).
We are Registered Investment Advisor (RIA) regulated by the SEC.
As for taxes, we provide a yearly summary for realized gains and losses that most tax professional can plug into their software.
And for TLH, yes for larger portfolios (above 20 tickers) we create a factor model of the portfolio using 4 factors - Momentum, Value, Quality and Min Volatility. When a stock is identified for TLH purposes, we will sell it and try and bring your overall portfolios factor exposure back in line. This provides for a much more flexible and robust way to do tax loss harvesting because not every stock has a relevant pair (for example a stock that just recently merged with another business might have no clear comparables)
I found this PDF from State Street quite informative on the topic. We are working on our own data here as well and aim to share that down the line.
https://www.ssga.com/library-content/pdfs/etf/au/spdr-au-etf...
"Bid/ask spreads of the underlying securities directly impact the costs to market makers to trade ETFs" from this .pdf: https://www.ssga.com/library-content/pdfs/etf/au/spdr-au-etf...
We are working on getting some more ESG focused portfolios directly live but it's very very do-able right now.
This is our current latest filed with the SEC:
https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_ia...
Apex Clearing's website is here: https://apexfintechsolutions.com/ They have 19M brokerage accounts and a lot of brands you've heard of got their start with Apex (Robinhood, Wealthfront)
We're US based and regulated a RIA by the SEC.
We do not charge trade commissions. There are some SEC fees charged for trading across most major brokerages. The national best bid offer (NBBO) means you will get executed at the current best price for a given security across all exchanges.