Frec's direct indexing platform uses AI to optimize the portfolio and minimize tracking error. The platform also allows customers to customize their portfolio, fund their account with cash or stock, and access a portfolio line of credit. The company claims its platform is more cost-effective and gives customers more control and customization over their passive investing compared to other robo-advisors.
Key takeaways:
- Fintech startup Frec has emerged from stealth, announcing it has raised $26.4 million in seed and Series A funding. The company's AI-based investment platform aims to simplify complex investment strategies and make them accessible to the average investor.
- Frec's flagship product, Frec Direct Indexing, allows customers to create their own customized portfolios of individual stocks that track the performance of S&P indices. This approach can generate up to an additional 2.11% in annual returns compared to investing in ETFs or mutual funds that track the same indices.
- Frec's platform uses artificial intelligence to optimize the portfolio and minimize the tracking error. It also allows customers to customize their portfolio by adding or removing sectors or stocks, and to fund their account with cash or stock.
- Frec's direct indexing platform is different from other robo-advisors as it gives customers more control and customization over their passive investing. It charges a flat 0.10% fee for direct indexing, compared to some robo-advisors charging 0.25% for basic index investing, or a financial adviser, who could charge up to 1% for direct indexing.