Frec

Frec is a modern financial technology company dedicated to making sophisticated wealth-building strategies accessible to everyone. Its flagship product is AI-driven Direct Indexing, a powerful investment approach previously reserved for institutional or high-net-worth investors. Instead of buying a single Exchange-Traded Fund (ETF), Frec allows you to own the individual stocks that make up a market index (like the S&P 500). This direct ownership unlocks significant advantages, primarily through automated tax-loss harvesting and portfolio personalization. Frec is an SEC-registered Broker Dealer and Registered Investment Advisor, with customer assets held at Apex Clearing and protected by SIPC insurance, ensuring a high level of security and trust.

How to use Frec

Getting started with Frec is a streamlined process designed for modern investors:

1. Create an Account: Sign up on the Frec website. The platform supports various account types, including individual, joint, business, and trust accounts.
2. Fund Your Portfolio: You can fund your account with a cash deposit or by transferring existing assets, such as stocks or ETFs, from another brokerage. Frec can manage the transfer tax-efficiently over time.
3. Select an Index: Choose from over 16 available indices from leading brands like S&P® and Russell®. Options include popular broad-market indices like the S&P 500®, Russell 2000®, and various sector-specific or ESG-focused indices.
4. Customize Your Strategy: This is a key feature. You can personalize your chosen index by excluding specific stocks or entire sectors (e.g., fossil fuels, tobacco) or by adjusting the weights of companies you believe in.
5. Automated Management: Once set up, Frec's algorithms take over. They continuously monitor your portfolio and perform daily tax-loss harvesting, automatically selling positions at a loss to offset capital gains taxes and then reinvesting the proceeds to maintain your target allocation.
6. Monitor and Access Other Features: Track your performance and tax savings through the Frec dashboard. You can also utilize other Frec products like a high-yield Treasury account or borrow against your portfolio with a low-rate portfolio line of credit.

Core Features of Frec

• AI-Powered Direct Indexing: Replicates index performance by holding individual securities, providing greater control and tax opportunities than ETFs.
• Daily Tax-Loss Harvesting: Sophisticated algorithms automatically identify and realize losses to reduce your tax liability, potentially adding significant "tax alpha" to your returns.
• Portfolio Customization: Exclude or overweight specific stocks and sectors to align your investments with your personal values (ESG), market outlook, or existing holdings.
• Broad Index Selection: Invest in a wide range of indices covering different market caps, sectors, and regions.
• Low-Cost Portfolio Line of Credit: Borrow against your investment portfolio at a competitive variable rate (Effective Federal Funds Rate + 1%).
• High-Yield Treasury Account: Earn a competitive yield on your uninvested cash, kept liquid and secure in money market funds.
• Commission-Free Stock & ETF Trading: A self-directed trading account is available for trading individual stocks and ETFs with zero commission fees.
• Robust Security: Frec is an SEC-regulated fiduciary and FINRA member, providing SIPC insurance up to $500,000, with additional excess insurance from Apex Clearing.

Use Cases for Frec

Frec is particularly beneficial for:

• Tax-Conscious Professionals: Ideal for individuals in higher tax brackets who want to actively minimize their capital gains tax throughout the year.
• Passive Investors Seeking an Edge: For those who believe in index investing but want to enhance returns beyond what a standard ETF can offer through tax savings.
• Values-Driven Investors: Enables the creation of personalized portfolios that reflect ethical, social, or environmental beliefs by excluding non-compliant companies.
• Investors with Concentrated Stock Holdings: Provides a tax-efficient pathway to diversify a large single-stock position over time without triggering a large, immediate tax event.
• Anyone Seeking Institutional-Grade Tools: Democratizes access to direct indexing, a strategy that traditionally required very high minimums and was offered by expensive wealth managers.

Advantages of Frec

Frec stands out from other investment platforms due to several key advantages:

• Superior Tax Optimization: Frec's daily tax-loss harvesting can capture up to 2x more tax losses than typical robo-advisors that use ETFs, directly boosting your after-tax returns.
• Cost-Effective: The advisory fees are extremely competitive, often on par with or lower than the expense ratios of corresponding ETFs, but with the added benefits of tax harvesting and customization.
• Unmatched Personalization: Go beyond one-size-fits-all ETFs and build a portfolio that is truly yours, tailored to your financial goals and personal values.
• Simplicity and Automation: Frec handles all the complex trading, rebalancing, and tax optimization, making a sophisticated strategy feel as simple as owning an ETF.
• Transparency and Security: Frec offers a clear fee structure with no hidden costs, combined with top-tier regulatory compliance and security protocols to protect your assets and data.

Pricing and Plans

Frec's pricing is based on a transparent annual Assets Under Management (AUM) fee for its Direct Indexing service. There are no trading commissions for the direct indexing strategies.

• The fee varies depending on the chosen index, starting as low as 0.09% per year.
• Sample Annual Fees & Minimums:
  • S&P 500®: 0.09% ($20,000 minimum)
  • CRSP US Total Market: 0.13% ($50,000 minimum)
  • CRSP US Small Cap: 0.15% ($50,000 minimum)
  • Russell 2000®: 0.26% ($50,000 minimum)
  • S&P 500® Shariah: 0.35% ($20,000 minimum)
  • MVIS US Semiconductor: 0.35% ($20,000 minimum)
• Self-Directed Trading: $0 commission on stock and ETF trades (other regulatory fees may apply).
• Portfolio Line of Credit: A competitive variable interest rate of the Effective Federal Funds Rate + 1%.