Unlock higher after-tax returns

With index ETFs, you’re investing in a fund: It’s a pre-packaged group of stocks, meant to mirror a market index.

With Direct Indexing, you directly own (get it?) stock from a subset of companies in an index. This allows you to fine-tune your investing by removing certain companies from your portfolio, all while using tax-loss harvesting to lower your tax bill.

Direct Indexing is best for those investing in a non-registered account who want to maximize their after-tax returns and have more control over what they own.

You can choose to track a U.S. or Canadian market index — either the Morningstar US Target Market Exposure Index or the Morningstar Canada Domestic Index.

Find out more information about Morningstar here.

No. But you don’t need to own every stock in the index to match its returns — some of them are so small, they don’t move the needle on returns.

With Direct Indexing, your portfolio is automatically optimized to hold as many stocks as it needs to mirror the returns of the index. This leaves plenty of opportunity for tax-loss harvesting — when one stock loses value, we’ll sell it and buy something similar. In turn, that keeps your market exposure steady.

Yes. Since you own the individual stocks, you receive dividends directly into your account as they’re paid out, and these dividends will be automatically reinvested.

Nobody likes losing money on their investments. But when it happens, you can actually use those losses to save money on your taxes — that's tax-loss harvesting. Here's how it works: When a stock loses value, we'll sell it to offset gains made elsewhere in your portfolio. In turn, that can reduce your tax bill, and the money you save is called tax alpha.

When you take that saved money and automatically reinvest it — often in a similar stock — that’s tax alpha reinvestment, and it can boost your returns even further. All while keeping you invested in the market.

Direct Indexing accounts will begin performing tax-loss harvesting at the identity level, not the account level. 

That means that your Direct Indexing account will take into account any stock sales in your other Wealthsimple accounts. We’ll also avoid trades in your Direct Indexing account that would be considered superficial losses. Unfortunately, we won’t have visibility into stock trading you’re doing outside of Wealthsimple.

You can remove any company from your portfolio. This is useful if you have personal preferences — or need to avoid holding stock in a specific company.

Direct Indexing comes with a 0.15% service fee. That’s better than many index ETFs, which carry fees of up to 0.18% — and can charge up to $9.99 per trade. Also good to know: The tax savings you’ll get from Direct Indexing often offset (or even exceed!) your portfolio’s fees.

Returns are based on historical performance of the Morningstar U.S. Target Market Exposure Index and Morningstar Canada Domestic Index. Past results are no guarantee of future performance.

Most direct indexing strategies will generate many transactions, as they perform tax-loss harvesting and rebalancing. All buy and sell transactions will appear on a client’s T5008 tax slip and will be available for auto-fill from the Canada Revenue Agency.

No, USD accounts are not currently available.

Yes, in U.S. index accounts only, since we need to convert your CAD to buy U.S. stocks. But good news: We’re now charging even less for currency conversion. Instead of paying our standard conversion fees, you’ll now be charged a reduced spread of 0.05% — that’s the Wealthsimple Investments Inc. (WSII) corporate exchange rate — when we buy or sell foreign securities to trade in your account. That rate also applies to any deposits, transfers, or withdrawals that involve currency exchange.

With our new, lower rates, a $10,000 deposit carries a $5 conversion fee. If you receive dividends, they’re subject to the standard WSII corporate exchange rate — see our fee schedule for more details. One thing to note, though: the WSII corporate rate is a live rate that includes a spread, meaning it can vary due to market conditions.

Getting started is easy, but you’ll need to use our mobile app, as this portfolio isn’t currently available on our web platform. Next, fund your account with at least $1,000, and we’ll have your money invested within 5 days. The more you invest, the more you’ll potentially save at tax time — that’s tax-loss harvesting at work.

More information on opening a Direct Indexing portfolio is available here.