Fidelity is a well-respected name in the financial industry, known for its extensive research tools and dedicated customer support. For investors seeking to build their own portfolios, Fidelity offers individual stock and ETF trading. They also provide two managed portfolio options: Basket Portfolios and Managed Fid Folios.

Understanding Fidelity's Basket Portfolios and Managed Fid Folios

Basket Portfolios, formerly called Fid Folios, are priced at $4.99 per month, and allow users to create and manage a collection of stocks and ETFs. You can think of them as self-created, mini-ETFs within your account. However, one notable limitation is that they do not offer automated tax-loss harvesting, and only let you choose from

Managed Fid Folios, on the other hand, are actively managed portfolios that do include tax-loss harvesting. They come in two flavors, either actively managed strategies that cost 0.70% of AU, or Direct Indexing strategies that charge 0.40% of assets under management (AUM). While this service provides professional management and tax optimization, the fee structure may be a significant consideration for cost-conscious investors.

Introducing Double: A Compelling Alternative

This is where Double enters the picture. At just $1 per month, Double offers a compelling alternative to both Basket Portfolios and Managed Fid Folios, providing a suite of features designed to empower investors with greater control, flexibility, and potential for tax efficiency.

Why Choose Double Over Fidelity?

Lower Fees

The clearest advantage of Double is its pricing. At $1/month, it significantly undercuts Fidelity's $4.99/month fee for Basket Portfolios and the 0.70%-0.40% AUM fee for Managed Fid Folios. For investors, especially those with substantial assets, these cost savings can add up significantly over time.

Direct Indexing and Broader Selection

Double allows for direct indexing, meaning you own the individual stocks within an index, rather than just an ETF that tracks the index. This provides greater transparency, control, and customization. You can see exactly what you own and make adjustments as you see fit.

Furthermore, Double offers a much broader selection of indexes to choose from, with over 50 prebuilt strategies. These strategies cover a wide range of investment styles, sectors, and risk tolerances. Whether you're interested in large-cap growth, small-cap value, or specific industry exposure, Double likely has a prebuilt strategy to suit your needs.

Double also allows you to set market cap weights. For example, you could choose to invest in an index but overweight small-cap stocks compared to their natural market cap weighting. This allows for a level of customization not typically found in traditional index funds or ETFs, although managed FidFolios do offer this capability.

Build Your Own Custom Strategies

Beyond prebuilt options, Double empowers you to build your own custom strategies. Using Double's powerful screener, you can filter stocks based on a vast array of criteria, including market capitalization, sector, industry, and various financial ratios. You can select individual stocks, specify their weights within your portfolio, down to multiple decimal places, and create a truly personalized investment strategy.

While Fidelity allows for some customization within its Fidfolios and Basket Portfolio’s, Double's platform offers greater flexibility in creating and managing your own investment strategies. You can fine-tune your portfolio to align perfectly with your specific goals, risk tolerance, and investment philosophy.

Automated Tax-Loss Harvesting

Double's automated tax-loss harvesting feature, utilizing pairs or factor-based TLH, can help minimize your tax burden. Here's how it works:

• Pairs-Based TLH: If one of your investments declines in value, Double will automatically sell it and replace it with a highly correlated security. This allows you to realize a loss for tax purposes while maintaining your desired market exposure.
• Factor-Based TLH: This more advanced method considers the underlying factors driving a stock's performance, such as value, growth, or momentum. Double will identify a replacement security that scores similarly on these factors, ensuring your portfolio remains aligned with your investment strategy while still capturing the tax loss.

This tax management strategy can potentially lead to significant tax savings over time, further enhancing your after-tax returns. Learn more about all of Double’s strategy optimization modes in our help center.

Dollar-Cost Average Between Strategies

Double allows you to dollar-cost average between strategies, gradually shifting your investments over time while considering tax consequences. This feature helps to smooth out market volatility and can be particularly useful when transitioning between different investment approaches.

For example, if you want to gradually move from a growth-oriented strategy to a more conservative one, Double can automate this process, making regular, pre-determined investments in the new strategy while strategically selling portions of the old one. Importantly, Double's system takes into account potential tax implications and helps avoid wash sales (selling and repurchasing the same or substantially identical security within 30 days, which would disallow the tax loss).

Safe and Trusted

We utilize Apex Clearing, a trusted and widely used custodian, to ensure the security of your assets. Apex is a leading clearing firm that provides clearing and custody services to many well-known financial institutions. You can learn more about our commitment to security in our other blog post: Why You Should Trust Double.

Table of Comparisons

Conclusion

If you're a Fidelity user looking for more control, flexibility, and potential tax advantages, Double offers a compelling alternative. With its low fees, direct indexing capabilities, customizable strategies, and automated tax-loss harvesting, Double empowers you to take charge of your investments and optimize your portfolio for long-term success. While Fidelity remains a solid choice for many investors, Double's unique combination of features and affordability makes it a platform worth serious consideration.