SAN FRANCISCO, CA — Feb. 4, 2025 — Frec, the innovative investment platform known for redefining direct indexing, today announces the launch of its Portfolio Allocation feature. Unlike traditional robo-advisors that enforce automatic rebalancing, Frec empowers investors with the choice of how and when to rebalance their portfolios, marking a shift in how investment management is approached.
Most robo-advisors adhere to rigid allocation models, frequently rebalancing portfolios to maintain predetermined ratios. This approach often leads to suboptimal performance, as it requires selling high-performing assets to purchase underperforming ones. Frec’s Portfolio Allocation feature challenges this norm by putting decision-making power directly in the hands of investors and allowing them to make one-time cash deposits, yearly for example, to solve rebalancing.
“For years, robo-advisors have promoted the idea of constant rebalancing as the gold standard, but this one-size-fits-all approach often doesn’t align with real-world investor needs,” said Mo Al Adham, CEO and Founder of Frec. “With our Portfolio Allocation feature, we’re breaking away from this flawed model. Investors can now rebalance at their own pace, ensuring their portfolios reflect their personal strategies, and with more tax efficient alternatives.”
Here’s how it works: investors set their desired portfolio allocation—for example, 60% U.S. stocks, 10% international stocks, and 30% money market funds. Instead of automatically buying and selling assets to maintain these ratios, Frec offers tools to help investors decide when and how to rebalance. Options include:
Sell and Buy: Investors receive recommendations on selling or buying but retain full control over executing changes. This is the least tax efficient option and is on autopilot at other roboadvisors.
Cash Deposit: Frec encourages using external funds to bring allocations back in balance without triggering unnecessary sales.
Leverage Up: Users could alternatively fund their cash deposit using Frec’s portfolio line of credit to rebalance their portfolio.
This level of flexibility allows users to avoid the common pitfalls of forced rebalancing, such as realizing unnecessary capital gains or selling high-performing assets when other options exist. Where many robo-advisors have made the assumptions that customers have all their assets with them, most customers have multiple brokerage and bank accounts. Faced with a tax bill to rebalance, many customers would prefer to move cash or even use a line of credit loan to rebalance rather than sell-and-buy and incur a tax bill. Frec’s Portfolio allocation feature is designed for today’s investors, who often maintain multiple accounts across platforms and prefer a tailored approach to wealth management.
“By moving away from automatic rebalancing, investors can now approach rebalancing strategically, deciding when it’s the right time to act based on their goals, market conditions, and tax considerations,” added Al Adham.
The Portfolio Allocation feature further strengthens Frec’s position as a leader in innovative investment solutions for self-directed investors. It builds on the company’s commitment to empowering its users with tools that simplify sophisticated strategies, optimize tax savings, and enhance long-term returns. With $170M in customer assets and a growing suite of features, Frec continues to challenge traditional financial norms, offering products that meet the nuanced needs of high-net-worth, self-directed investors.
About Frec
Established in 2021, Frec Markets Inc. (“Frec”) is a financial technology company dedicated to helping customers build wealth through innovative and accessible investment solutions. Frec offers a suite of automated self-service products that simplify sophisticated investment strategies traditionally available through wealth managers. These products include direct indexing and portfolio lines of credit. Frec also offers a high-yield treasury account.
Frec's Direct Indexing is one of the first direct-to-consumer solutions that enables customers to invest in a variety of direct indices, combining the benefits of index investing with added tax savings and customization. By optimizing for both returns and tax efficiency, Frec empowers investors to achieve their financial goals with greater precision and control.
To learn more about how Frec is revolutionizing wealth management, visit Frec.com.
Disclosures
Investing involves risk, including risk of loss. Borrowing against your portfolio adds to that risk, including losing more than invested. Borrow rate will vary with EFFR. The amount available to borrow is based on the positions in your portfolio. The initial borrow amount available is typically 50% of your portfolio value, and can gradually increase to a maximum of 70% when your portfolio appreciates in value.
Brokerage services provided by Frec Securities LLC, advisory services provided by Frec Advisers LLC, an SEC RIA. Both are wholly owned subsidiaries of Frec Markets, Inc.