Schwab Develops Long-Short Offering to Extend Direct-Indexing Capability

Charles Schwab is developing a proprietary long-short offering that would extend its direct-indexing capability, CEO Rick Wurster said during an Oct. 15 webcast, taking Schwab’s individual-stock approach into long-short accounts.

Schwab’s existing Personalized Indexing service is a separately managed account that holds individual stocks and can harvest losses at the individual-holding level. Investors’ actual tax benefits are not guaranteed.

Wurster said Schwab had slowed growth in its current long-short program to ensure it had the operational capacity to support the activity. He described the planned offering as a way to extend direct indexing into long-short strategies on a sustainable basis.

Schwab had $187.9 billion in margin loans as of Sept. 30, up 14% from the prior quarter. Of that amount, $60.7 billion was related to long-short strategies used by registered investment advisers.

Schwab has not announced a launch date, product name, fees, minimum investment, eligibility rules or detailed structure. Wurster said future calls would provide updates on timing.