One of the most effective ways to customize a portfolio, in our view, is using an approach called direct indexing. Like traditional index funds, direct-indexed accounts are designed to track the performance of a benchmark. But instead of owning shares in a commingled vehicle like an ETF or mutual fund, investors own many of the underlying securities that comprise the index in a separately managed account (SMA). This direct ownership allows investors to tailor their portfolio in a number of ways to suit individual preferences and needs.