How Direct Indexing Benefits High Net Worth Individuals

On this episode of A Wiser Retirement™ Podcast, Casey Smith is joined by Andrew Pratt to talk about what direct indexing is, the pros and cons, and how it benefits high-net-worth individuals. Listen to this episode to see if Direct Indexing is the right strategy for you!

Podcast Episodes Referenced:
- Ep 175: Passing Down Generational Wealth
- Ep 152: 10 Tax Planning Strategies for High Net Worth Individuals

YouTube Video Referenced:
- How to Hire a High-Net-Worth Financial Advisor

Blog Referenced:
- Is direct indexing the right strategy for you?

Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!

Connect With Wiser Wealth Management:
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- Casey Smith's Twitter
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This podcast was produced by Wiser Wealth Management. Thanks for listening!

Transcript

Speaker 1: 0:00

If you think about the S&P 500 and the S&P is up 20% for the year, like last year or more, what was it? 2026? Yeah, 26% last year. Do you think all 500 companies were up?

Speaker 2: 0:16

No no yeah?

Speaker 1: 0:17

No, you're gonna have Some losses in there, right? So in the ETF structure, you would have made 26%. In a direct ending indexing structure, you would have. You wouldn't have owned all 500 companies, though, right, you would own a representation of the index. Is that correct, Right? Yeah, that's correct. Welcome to a wiser retirement podcast. We believe the best financial advice should always be conflict free. I'm your host, casey Smith. Today. I'm joined by Andrew Pratt, the king of data, to talk about direct indexing benefits for high net worth individuals.

Speaker 3: 0:56

Hey.

Speaker 1: 0:56

Andrew. Good morning Casey. So this is. This is exciting. This is something we've been talking about for really a couple of years. You know, direct indexing, I think, is definitely the way of the future. In the meantime, though, let's take a step back in time. Let's go back to, you know, 2004, 2000, 2009, 10 this these things called ETFs, exchange traded funds were All the hot topic, right Right, all the rage. Mutual funds, ever since, I believe, 2003, 2004, have been losing Value, not not in price, but just in losing assets, is what I should say, and there's a good reason.

Speaker 2: 1:46

The ETF structure was much more efficient to own inside brokerage accounts than mutual funds right, yeah, it's, you know, generally lower fees and I think we had a podcast on this but Lower fees and it's much more tax efficient than a mutual fund wrapper.

Speaker 1: 2:04

So you think about all the trading that mutual fund managers do in the in their portfolio and, and all those trades generate capital gains, hopefully, right, right, so those gains get passed through. Now you can even have capital gains in years where the mutual fund lost value, which becomes very tax inefficient and you didn't have transparency, there's all. There's lots of reasons as as to why the mutual fund model has been dying. Then come these ETFs where you don't have these negative tax consequences. Now there are rare situations where you do get capital gains, especially in the lesser managed ones. But the larger ones, your vanguard black rocks. Now. Now sometimes there's so many gains you can't help but have capital gains. That does happen.

Speaker 1: 2:53

But the point is is that the ETF structures was more efficient and the first Generation of ETFs were really just passive vehicles like the. You could buy the S&P 500 through an ETF. You could buy the Russell 1000, russell 2000, 3000, small cap S&P 600 or 400 For small mid cap space. You in the international, you could buy the MSI indexes, right, you can do all these passive things. Now in the world of ETFs, I think there's more active ETFs and there are passive ETFs. So they meet you fund active management structure move to the ETF format, so really they should be called exchange rated products and then we should probably talk about what they do. But that's not what we did in the US, so it's very confusing for people trying to learn. But ETF is just a structure and then inside that structure you could be passive or you could be active and right right and I'd say active ETFs have Become more prominent over recent years.

Speaker 2: 3:53

But I say, you know, in today's world it's it is more dominated by a passive exposure Track and a benchmark our sector, whether it's a US sector or international sector, but our asset class but but yeah, there are active ETFs out there that have like a slight management overlay and it's still in that efficient tax tax Format and it's also, you know, generally a lower cost to buy so then inside our brokerage accounts, we can now run multiple models that allow us to move from one model to the other model with the same underlying holdings, meaning that the S&P 500 by Vanguard, it's the same 500 stocks and the S&P 500 by State Street or Black Rock or Insert company name, right, right.

Speaker 1: 4:42

So there's really what's really cool about that is when you have a year like 2022, where you have a significant loss in the S&P 500.

Speaker 1: 4:49

If you have a loss in the number of shit in the capital gains in your portfolio meaning the price you paid on December 31st 21 is now much lower in July of 22 you can sell the S&P 500 and buy a like ETF that has basically the same underlying holdings and you can get you can create a tax loss right Now, the most you can deduct in one year is $3,000, but it carries forward.

Speaker 1: 5:16

So if you generated six, seven hundred thousand dollars in losses, it's paper losses, because the portfolio is no longer not invested, it's just reinvested in something very similar. So the benefit right, the benefit is you can create these tax losses to carry forward. So, for example, we have one family. We generated probably a half million dollars in losses. They have recovered all those losses, just as if they had never sold it in their portfolio from 22. And they're selling a commercial building in the future. So when they sell that commercial building for, let's say, it's a million dollar capo gain, we now have that half million dollar credit sitting there waiting for them, so they don't have to pay as much in capo gains tax. So for more fluid investors, the ETF structure enabled that to happen Now.

Speaker 3: 6:11

Now let's take it one step further.

Speaker 1: 6:14

That was the past. Let's take it one step further and enter direct indexing. Now, direct indexing and custom indexing I think they get kind of used interchangeably, yeah personalize and index and custom indexing, but yeah, it's and then a lot of the origins was for to build your own index that could exclude certain, certain companies. Right was the idea.

Speaker 2: 6:38

Yeah, I think originally it was built more around customization and, you know, while there are sponsors or firms offering that aspect of it, it generally is used to track a broader market and to see like the S&P 500 or Russell 1000.

Speaker 1: 6:55

So why would we give up ETFs for direct indexing?

Speaker 2: 7:02

Good question. So, as you mentioned, there are ETFs, are very tax efficient and you can do tax loss harvesting and, you know, lower your tax liability over time. However, you know the direct indexing. You are directly owning the underlying securities of the index. So, for instance, the S&P 500, you could own 500 individual stocks in your account and, you know, in any given year you know there could be a good amount of stocks that are at a loss and you can individually tax all, harvest those stocks. And actually, if you're watching on video, if you look at the chart that we have, you can see, you know, from 2012 through 2022, this is the Russell 1000, but you know ranges from you know 120 stocks that were at a loss, that had negative returns. So even last year or, sorry, in 2022, that had their 800 stocks. So direct indexing allows you to directly own these stocks and to individually sell these stocks if they were at a loss.

Speaker 1: 8:14

So you know to a layperson, if you went out and you picked 40 securities to buy and you have a loss in a couple, most people go, oh, I don't want to sell that, I've lost money, I need to wait for it to rebound, right. But if you back up a step, if you go to a higher level, if you think about the S&P 500, and the S&P is up 20% for the year, like last year or more, what was it? 2026? Yeah, 26% last year. Do you think all 500 companies were up?

Speaker 2: 8:49

No no.

Speaker 1: 8:50

No, you're going to have some losses in there, right? So in the ETF structure you would have made 26%. In a direct ending indexing structure, you would have. You wouldn't have owned all 500 companies, though, right, you would own a representation of the index. Is that correct?

Speaker 2: 9:06

Right. Yeah, that's correct. I mean, if you're tracking the S&P 500, it might be like 300-ish, but you know, if you're tracking the rest of 1000, it could be like 500. So, again, it's just more opportunities with the quantity of stocks, more opportunities to realize those losses.

Speaker 1: 9:19

So you buy a representation of the index Correct and the software that's used to do this, even though you don't own all the companies. It has a pretty low tracking error. Is that correct?

Speaker 2: 9:32

That's correct. And the software, you know it's a systematic process that optimizes the portfolio rebalancing to this index. And, you know, depending on whether you know you're coming in, so to say, if you come in with fresh cash, it's, you know, optimized immediately and it has a very tight tracking error to that index. But if you're coming in with, just say, you know, low basis stocks, you know, just say you're an executive at Home Depot or someone that has a lot of Home Depot stock, you're probably going to have a big unrealized gain in that. So the tracking error might be a little bit wider starting out but over time this software will systematically, you know, get you closer to that tracking error, to a smaller tracking error.

Speaker 1: 10:14

But if you walk in with cash, you're going to have a really low tracking error Right.

Speaker 2: 10:18

I mean you'd be invested immediately on model.

Speaker 1: 10:23

So if you think about all the cola stocks, so I just make up one like RC cola, coca-cola, pepsi cola, what you know I was with some other cola stocks. I should know this Dr.

Speaker 1: 10:36

Pepper. So you know, on these cola stocks, but maybe instead of buying them all, you buy representation of the group Right, and typically they all kind of run together right, right. So the idea here is if some of these lost money, then you would sell the one that lost money, create that credit but then buy something else in the same group so that your representation of the index stays pure.

Speaker 2: 11:00

Right, and I think that's an important point to note, is just say, for example, the Russell 1000, which is again very similar to the SP500, its US large cap. You know the weightings might not be exact, but the software is looking at not just you know, the tracking error and absolute weighting like, say whatever Microsoft's 7% or 5% of the index. It's looking at different correlations and risk measures and it's you know, based on the characteristics of that index, it can underweight or overweight certain securities, just to get into that line of the risk and return metrics of that index.

Speaker 1: 11:40

So, basically, you're able to track the index now, but you're also able to generate these tax credits along the way.

Speaker 2: 11:47

That's the whole idea.

Speaker 1: 11:49

So tax efficiency, that would be, I'd say, the number one benefit.

Speaker 2: 11:54

The primary benefit.

Speaker 1: 11:55

Okay, so let's move into the next benefit Reduce concentrated stock risk. So we get clients quite often that come to us with low basis stock. They might have five, 10, in some cases one case like 116 holdings, but they've held them for a really long time.

Speaker 2: 12:17

Right.

Speaker 1: 12:18

So if you have all these individual stocks at low basis, you can't really get rid of it. You could buy, you could keep holding those and try to buy some ETFs to fill in the gaps. That's what we used to do, but now, with direct indexing, what can we do?

Speaker 2: 12:33

so with direct indexing, you know, again, it would probably takes additional cash to be able to for the software and the strategy to work. But you can transfer or you can journal over these shares and you know we work our Provider strategy provider that we work with, you know we do analysis to to see how many shares of these legacy holdings they can journal over for the for the track and error to be close enough to where it would work. But you can journal over these shares and then add this fresh cash and then over time it would, you know, with the tax loss harvesting. You could use these losses to either, you know, have the losses for carry forward into offset gains in the portfolio elsewhere, or you could help diversify your portfolio holdings and, and you know you might have this legacy account that has all these concentrated stock positions and it's very, it's not diversified. There's a lot of unsystematic risk there because of the individual company risk. So you could use the losses to help, you know, build out your allocation in a more diversified way.

Speaker 1: 13:42

So, basically, if, if I was a Home Depot executive and I retired there and I had, you know, 1.5 million dollars of Home Depot stock and a two million dollar portfolio, then we can't, you know, we don't want to buy any more Home Depot, right? So if you try to diversify by buying an ETF, you're just probably gonna have Home Depot in it. So you're just buying more Home Depot inside the ETF. So with direct indexing we can take Home Depot.

Speaker 1: 14:10

We can say, well, we can't move it all into the separate managed account that does the tax loss harvesting, because it'd just be all Home Depot and a few of these other stocks. But maybe they can take what you know. We can sell off a portion, right, we're gonna pick some capital gains that generate some cash and then maybe we can take 25% of Home Depot and Move it into the index and then as we work through, you know, because 25% of Home Depot is not, it's not 25%, it's not 25% of the S&P 500 is probably less than 1%. So you know, but you're substituting it, you're not buying any more, right? And over time you can use those that tax loss harvesting to work off those shares of Home Depot, which would take quite a while it would take a while and that actually leads to.

Speaker 2: 14:58

The next benefit is, I guess, like Customization, which, you know, we would recommend that this is only for a few select clients, but for the company executives that have these concentrated stock positions, you can actually, you know, tell the strategy Software to exclude Home Depot from purchasing that stock going forward, because you have a lot of Home Depot stock elsewhere, right? Are you curious why annuities keep coming up as a potential investment option?

Speaker 3: 15:25

People are often told that annuities can effectively mitigate investment risks and help secure their financial future. However, annuities often benefit the salesperson and might not be the best choice for you as a consumer To learn more about the various types of annuities. The negatives of owning the annuities is that they are not the best choice for you as a consumer To learn more about the various types of annuities, the negatives of owning them and better investment alternatives. We have a free e-book on our website just for you to download our e-book. Fire beware. Why do they keep trying to sell you that annuity? Simply click the link in the episode notes or visit wiser investor comm slash guides. Now let's get back to the episode so.

Speaker 1: 16:13

We can reduce concentrated stock risk, to be able to Diversify portfolio more going going forward. Now, you know, sometimes you know people have we've had Microsoft a large holdings of Microsoft before, and that's been a great investment, and so you. But it's still, when you think about legacy planning and and and you know, if you're especially you're Younger and you retire, you really you want, you want to kind of offload some of that right. You could do some of that through gifting. There's so many strategies to deal with concentrated stock. You go ahead and gift it to the next generation. You could. You know you can take the dividends and making sure that you're not buying more of the company. You're not in a dividend reinvestment plan, but this this to me, direct indexing makes, makes the most sense of keeping control and then Trying to use those credits going forward to to reduce the holding Customizable. So I can't we kind of hit on this already, though, but if you, if you wanted to create an index that basically didn't hold its most popular, unfortunately, with, like, the ESG agenda.

Speaker 2: 17:26

I would say so yeah.

Speaker 1: 17:27

Eliminate you know, non-highly rated ESG companies from your portfolio. This is how you would, this is how you could do that. Typically, I think, people are trying to exclude things. What about, you know? Think about customization. You know why? Couldn't you do something that, instead of excluding, you would? Overweight, yeah, overweight, right.

Speaker 3: 17:50

Like, I want to overweight technology, or I want to.

Speaker 1: 17:53

You know, overweight, that is yeah, that is cocumber staples, or something like that.

Speaker 2: 17:57

right, that is a good question. Yeah, from what I've seen, it's mostly exclusionary parameters. But yeah, I guess you technically could, depending on the provider's offering, you could probably overweight, as long as it's within that track and error range, to where it'd be an acceptable range to track that index. Yeah, Okay.

Speaker 1: 18:20

So when you think about how you execute all this in an ETF, you buy it and you know we look at it once a week and make sure everything's performing the way it's supposed to. Versus our benchmark, how is customization of an index different? I mean, to me you'd have to be monitoring it almost by the hour, looking for tax loss opportunities.

Speaker 2: 18:42

Right, and that's one thing you know. I'd say is another kind of side benefit is you know this strategy is professionally managed. You know they have a full team. You know for one it's driven the recommendations and the portfolio rebalance and is driven by the software technology. But then there's a team of portfolio managers that are analyzing this on a daily basis and you know whether they're receiving alerts. You know the market's down, you know X percent and then you know per account, they probably have, you know, tax loss harvesting alerts set up to where they can say okay, we receive a lot here from the software, let's go in and trade it. And then they can also, you know, monitor like, watch sales and make sure that they're trading appropriately.

Speaker 1: 19:26

So obviously it takes some active management, not so much by our firm but the provider that we're using to do this. So then that begs me to the next question what's the cost? What's the cost for me to do this?

Speaker 2: 19:39

Yeah, that is one of the I'd say shortcoming. Or you know, downside it is a little bit higher costs. You know these providers charge a management fee. You know, I'd say most fees range from 20 basis points or 0.2 percent to 1 percent. I will note that the provider we are using their fee is much lower than that, lower in that 20 bit management fee.

Speaker 1: 20:02

What are we?

Speaker 2: 20:03

at now, I think, 0.12.

Speaker 1: 20:06

0.12. All right, so why is it can do it for 0.12 versus a 1 percent fee? That's big difference, yes, very big difference, so 0.12. So, to put that in perspective, the average costs of our ETF portfolios are around 0.08 of a percent, so it's really not that much higher than the average. Right With a huge tax benefit.

Speaker 2: 20:29

And again and I think you know that it's worth it this 0.12 percent, given the fact that the team is looking at your account on a daily basis throughout the day. And again, it's this very institutionalized management process. That's right.

Speaker 1: 20:48

Who's the ideal client for this? Obviously, people with concentrated stocks. But if you have cash and you want to do this strategy versus the ETF models, what would you say is needed?

Speaker 2: 21:04

Yeah, I would say we say high net worth client, but I'd say generally having investable assets greater than, I'd say, $750,000, but enough of investable assets to meet that investment minimum in the strategy. The investment minimum that our strategy has is $100,000, which is lower compared to the industry standard, which is $250,000.

Speaker 1: 21:28

So if you're large cap, we're only doing this in large cap space right now so if your large cap allocation was at least $100,000, we could technically make this work.

Speaker 2: 21:37

Correct, and then I would also add in taxable accounts.

Speaker 1: 21:43

That was my next point. Yeah, if you have an IRA, there's no reason to be doing this. You can't generate any tax credits there. So this is gonna be for brokerage accounts, only the accounts that basically are not IRA or Roth qualified. So, ideally, just do the math. I mean, let's say it's $200,000 in this strategy, so $200,000 in a large cap exposure is at least what?

Speaker 2: 22:10

35% in the most conservative models.

Speaker 1: 22:14

So $570,000, so, yeah, probably that $570,000 range is a good place to start inside a brokerage account. Now, if you have an ETF IRA that has significant gains. Unfortunately, that's the first question I had when we started getting into this process. It's like, well, why can't you just unwrap an ETF? And they all said, yeah, we love to be able to do that. Technically you should be able to. If you had enough shares. They would take 25,000 shares, so you'd have millions of dollars at that point. It wrapped up in the S&P. But so you can't. You get to the strategy out of the ETF world. You'd have to liquidate the ETF and go to the strategy with cash. You can't give them an ETF and say, hey, work this into your strategy.

Speaker 2: 22:57

I mean, for instance, to say you own, like that's about 100 ETF or something that tracks that they can. Some providers can use that as kind of like a core holding not all of them though, but yeah, most of the time they can't work that into the strategy.

Speaker 1: 23:20

All right. So we gotta be fair and balanced when we talk about all of these new things. So what are some of the shortcomings, you feel like, of direct indexing?

Speaker 2: 23:29

Yeah, already touched on higher cost. There's the asset management fee for the third party separate account manager. There's higher investment minimums. Again, generally it's $250,000 is an industry standard and that's, I would say that's pretty standard for any kind of I don't wanna say private alternative necessarily, but any kind of separate account that's managed and not like the traditional investment format buying stocks, etfs, bonds, et cetera, and then so obviously with that there's a larger capital outlay for your investment and that's why we would say that this is more suitable for those higher net worth investors that have more liquidity and more assets, that they're more investable assets. Then I'd say the other shortcoming is just being comfortable with owning a separately managed account. There's some delays with the implementation as far as timing. It's not like just journaling your assets over and we can immediately invest it.

Speaker 1: 24:39

There's work that takes there's a lot of work in the background that goes in before your strategy can start moving Right. We have to. It could take a couple of weeks.

Speaker 2: 24:47

Yeah, it could take a couple of weeks. We're working on increasing those efficiencies there. But there's back and forth between myself and Casey and MSC on the advisor side just to make sure that we're all on the same page from an implementation standpoint. But then we have to relay that to the manager and then work with the manager just to get everything over. And then you have to whether it's selling on our end to get the account ready and then journaling whether it's shares or journaling cash over, and then, once the account's already under their management, then they can start trading. So there is a little bit of a lag, but again, we think the benefits outweigh the cost there.

Speaker 1: 25:30

So we kind of already touched on the ideal client for this. It's definitely a higher net worth, I'd say around $750,000 in investable assets inside a brokerage account, not inside retirement, a taxable people looking for some type of tax benefit going forward. And then, yeah, you say comfortable holding SMAs. I mean really, it's not really that much different than holding any other fund, other than you get to control, kind of, what's happening inside the SMA, where you don't really do that inside an ETF, I guess.

Speaker 2: 26:02

Yeah, and I guess it's more about that timing, because obviously if you want to redeem by all means it's your money you're able to do that, but it might just take a little bit longer to get those redemption assets. And again the manager's investing toward the strategy. So ideally you let the cash sit and let the manager and the technology go through its process. But obviously things pop up and investors need liquidity, so we understand that.

Speaker 1: 26:35

So we took a while to research this direct indexing. There's lots of providers now. Even Vanguard offers this. Ryan, our own portfolio software, offered this, which would be super close to home, right. So it's literally staring at it every single day. What was your process in doing due diligence on? And ultimately we decided to go with Charles Schwab on this?

Speaker 2: 27:01

Yeah, I think really operational efficiency was one of the main things I wanted to consider. You know, my previous firm that I worked at I actually I wasn't managing our direct indexing process but I was a backup and I saw how it worked and had a lot of insight into the optimization which was through Orion. So I know how much of a burden or not burden, but like a bear that was to take on and to manage it in-house yourself. So I wanted to make sure operational you know, ease of operational efficiency was kind of at the forefront. But also to just looking at the different investment minimums and offerings and the fees, that those were very important to me as well and just really the firm that we chose but you know by far had the best investment minimum and fee by far.

Speaker 1: 28:00

Yeah, and when I was at the Schwab conference not this last year but the year prior they were talking heavily about their direct indexing capabilities and they said, ultimately they want to drive the cost of direct indexing to be below the average ETF index ETF. Well, the average index ETF is like three basis points now, or 0.03. So the fact they're already the cheapest by such a large margin is very Schwab-like. But knowing that, hey, this price is probably going to keep driving down and we're working with a provider who's trying to change, really investing from that standpoint on the cost front, so I think that was a good choice, obviously.

Speaker 1: 28:42

Well, you know, again, this is not going to be for everyone and I will say that for those of you that are building assets outside of retirement, we do have a flight path program. It does not do direct indexing but it does do tax loss harvesting automatically and inside that flight path program. You know we do this internally, so all clients get tax loss harvesting here. But for those that are trying to build accounts, I think, hey, this is a really cool strategy. I like the light to be more tax efficient in my investing. It already exists in the ETF world, just doesn't do it to be a direct indexing, but we have three models. Then we're constantly able to move from model to model to harvest losses, to create tax credits, so it's already a part of our everyday process. This just takes it to a whole different level for those with enough assets to be able to make it worthwhile.

Speaker 2: 29:43

Right and again you know, like 2023, the SP500 was up 26.5%. Whatever it was, you couldn't tax loss. Harvest our SP500. Etf but with direct indexing. You know how many ever stocks were down that year. I think you know.

Speaker 1: 29:59

I can't really exactly remember. I think it was all of them, but seven, yeah, exactly.

Speaker 2: 30:03

It might have been yeah outside of the AI7, you know it could have been 480, whatever we'll throw in a number out there. But you could have, you know, realized some losses with direct indexing so you could have had some tax benefits there.

Speaker 1: 30:17

Absolutely Well, king of data. Thank you for coming back on and talking about all this. We do have a couple of episodes where we touch on this a little bit tax planning strategies for high net worth individuals episode 152, episode 175, passing Down Generational Wealth. We have a YouTube channel also called A Wiser Retirement how to Hire a High Net Worth Financial Advisor is a good one. I think I did that one a while back ago. We have a blog which we have referenced. Everything we've talked about really today is direct indexing your right strategy for you. That's a new blog out on our website. We also link to it here in the show notes. Anyway, thanks for listening today. If you're interested in learning more about wiser wealth management or want to schedule a consultation, meet with one of our fiduciary financial advisors. You can do so by going to wiserinvestorcom or click on the link in the show notes. Have a great day. Thanks, andrew, thanks Aisy you're listening.

Speaker 4: 31:30

That way, you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today at the wiserinvestorcom, reach out this episode was produced by Edward.

Speaker 4: 31:41

Or send us this podcast is strictly for informational purposes only and is not to be considered as investment advice or a solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles or a basis to make any financial decisions. Wise wealth management, incorporated, is a registered investment advisor with sec. The host and or guest may personally own securities, digital assets or other investment vehicles mentioned on this podcast. Neither the host nor guest of the show are compensated for their participation and no referral fees are paid to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Last performance is not indicative of future performance.