Vanguard to acquire Just Invest for direct indexing tech

Vanguard announced it has entered into a definitive agreement to acquire Just Invest, a provider of tax-managed, tailored wealth management technology, including Kaleidoscope, a direct indexing offer. Financial details were not disclosed in a company statement, and the purchase is expected to be completed in the fourth quarter of 2021.

“Technology-driven solutions such as direct indexing continue to reshape our industry, driving better investment outcomes and lowering costs for clients,” said Tim Buckley, Vanguard chair and CEO, in a statement. “Wise investments in technology are an important equalizer, enabling us to democratize valuable investment capabilities and products.”

Founded in 2016, Just Invest saw accelerating new asset growth in the first half of 2021 as assets under management surpassed $1 billion. Just Invest leverages large-scale data analysis, quantitative algorithms, and risk modeling to deliver scalable portfolio and tax management through its direct indexing platform. The firm’s capabilities will augment Vanguard’s $3 trillion financial intermediary business, serving registered investment advisors (RIA), bank, and broker-dealer financial advisors.

Just Invest’s platform uses sophisticated portfolio management tools traditionally available only to institutional or ultra-high-net-worth investors. The approach can support a high degree of portfolio customization, providing advisors with the ability to personalize investment portfolios to reflect investors’ values, financial objectives, and tax-loss-harvesting needs. Direct indexing can offer tax optimization benefits and serve as a values-based investing tool. Vanguard’s direct indexing offer will build upon a pilot program offered to its RIA clients over the past year and a half, powered by Just Invest.

Tom Rampulla, managing director of Vanguard Financial Advisor Services, said in a statement: “We’ve put tremendous focus on our financial intermediary business over the last decade to serve as a trusted and strategic partner to advisors. We are confident that Just Invest’s direct indexing capabilities will be a valuable complement to our ongoing efforts to help advisors redefine and underscore their client value proposition.”

As Vanguard’s largest division, Financial Advisor Services has partnered with US financial intermediaries for more than two decades, providing investment products, research, and thought leadership. In recent years, the firm has continued to make significant investments to best serve the evolving needs of advisors and their clients, including new model portfolio capabilities and strategies, as well as portfolio analytics tools and consultations to augment financial planning.

Through its acquisition of Just Invest and its innovative investment capabilities, Vanguard is poised to better serve advisors through broader, cost-effective access to tax-efficient, personalized investment solutions. Over time, Vanguard will work with the Just Invest team to expand its offer to a broader set of clients and build upon existing capabilities.

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