{"id":17875,"date":"2025-10-21T10:31:37","date_gmt":"2025-10-21T17:31:37","guid":{"rendered":"https:\/\/www.wealthfront.com/blog\/?p=17875"},"modified":"2026-01-29T14:26:43","modified_gmt":"2026-01-29T22:26:43","slug":"volatility-as-an-opportunity","status":"publish","type":"post","link":"https:\/\/www.wealthfront.com/blog\/volatility-as-an-opportunity\/","title":{"rendered":"Volatility As an Opportunity: How Direct Indexing the Nasdaq-100\u00ae Unlocks Tax Savings"},"content":{"rendered":"\n<p><em>Note: This piece originally appeared on <a href=\"https:\/\/www.nasdaq.com\/articles\/volatility-opportunity-direct-indexing-nasdaq-100-unlocks-tax-savings\">Nasdaq&#8217;s website<\/a> following the launch of Wealthfront&#8217;s Nasdaq-100 Direct. We are publishing it here with their permission.&nbsp;<\/em><\/p>\n\n\n\n<p>For decades, the broad U.S. stock market has rewarded many investors with steady long-term growth\u2014and concentrated exposure to some of the most innovative, growth-oriented companies has historically led to even higher returns. Investing in the Nasdaq-100 Index\u00ae is one way to get that exposure.<\/p>\n\n\n\n<p>In the last 10 years, the Nasdaq-100\u00ae (represented by the QQQ\u00ae ETF) has delivered an annualized return of 19.43% net of fees, handily outperforming the broad U.S. stock market (represented by VTI) which saw annualized returns of 13.93% net of fees over this period through August of 2025.<\/p>\n\n\n\n<p>Meanwhile, the biggest peak-to-trough loss for QQQ\u00ae was 32.55%, while VTI\u2019s comparable decline was 24.81%. The lesson: Exposure to growth-oriented companies provides an opportunity to realize higher returns\u2014but it also means riding out bigger swings along the way.<\/p>\n\n\n\n<figure class=\"wp-block-video\"><video height=\"1080\" style=\"aspect-ratio: 1920 \/ 1080;\" width=\"1920\" controls src=\"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2025\/10\/Main-4.mp4\"><\/video><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Direct indexing can make volatility work for you<\/h2>\n\n\n\n<p>The relative volatility of the Nasdaq-100\u00ae is good news if you use a direct indexing strategy. Direct indexing involves owning the individual stocks that make up an index and allows you to harvest losses from individual stocks\u2014even when the index as a whole is up.<\/p>\n\n\n\n<p>With tax-loss harvesting, capital losses are strategically recognized with the goal of lowering your tax bill. That means when an individual stock in the Nasdaq-100\u00ae declines below its purchase price, an investor can sell it, &#8220;harvest&#8221; a loss, and replace it with a similar stock to maintain the overall risk and return profile of the portfolio. These losses can then be applied against realized capital gains to lower your tax bill. Leftover losses can be applied against up to $3,000 of ordinary income, and any remaining losses carry forward to future years. Unlike ETFs, direct indexing gives you index exposure while turning day-to-day market moves into potential tax savings.<\/p>\n\n\n\n<p>Wealthfront pioneered automated direct indexing for retail investors, and now they\u2019ve brought that expertise to growth-oriented equities. Wealthfront\u2019s Nasdaq-100 Direct is the first-ever product that lets retail investors access the Nasdaq-100 Index\u00ae through a direct indexing strategy, and it\u2019s designed to give investors exposure to innovative companies and lower their tax bills at the same time. As Alex Michalka, Ph.D. and VP of Investment Research for Wealthfront explains:<\/p>\n\n\n\n<p><em>&#8220;It\u2019s very difficult to beat the market on a pre-tax basis, but investors can improve their after-tax returns with strategies like tax-loss harvesting. When you use a direct indexing strategy, volatility in the underlying stocks can work to your advantage and potentially generate significant tax savings. At the same time, you get similar performance to the index as a whole, much like an ETF. That\u2019s why direct indexing is so compelling as a strategy\u2014you get both.\u201d<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The advantage<\/h2>\n\n\n\n<p>Market volatility is inevitable\u2014but with direct indexing, it can also work in your favor. And with a 0.12% annual advisory fee, Wealthfront\u2019s new Nasdaq-100 Direct portfolio offers exposure to the index for less than the expense ratio of any Nasdaq-100\u00ae ETF currently on the market, including QQQ\u00ae and QQQM.<\/p>\n\n\n\n<p>To learn more, <a href=\"https:\/\/www.wealthfront.com\/nasdaq100-direct\">click here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Note: This piece originally appeared on Nasdaq&#8217;s website following the launch of Wealthfront&#8217;s Nasdaq-100 Direct. We are publishing it here with their permission.&nbsp; For decades, the broad U.S. stock market has rewarded many investors with steady long-term growth\u2014and concentrated exposure to some of the most innovative, growth-oriented companies has historically led to even higher returns. [&hellip;]<\/p>\n","protected":false},"author":10000,"featured_media":17888,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1315,1282],"tags":[],"coauthors":[2541],"class_list":["post-17875","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-insights","category-investing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Volatility As an Opportunity: How Direct Indexing the Nasdaq-100\u00ae Unlocks Tax Savings | Wealthfront<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wealthfront.com/blog\/volatility-as-an-opportunity\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Volatility As an Opportunity: How Direct Indexing the Nasdaq-100\u00ae Unlocks Tax Savings | Wealthfront\" \/>\n<meta property=\"og:description\" content=\"Note: This piece originally appeared on Nasdaq&#8217;s website following the launch of Wealthfront&#8217;s Nasdaq-100 Direct. 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