Frec recently emerged from stealth with a suite of automated self-service products to simplify sophisticated investment products traditionally only available via wealth managers. And the company’s flagship product Frec Direct Indexing, is one of the first direct-to-consumer products that enables customers to track S&P2 indices, delivering the benefits of index investing, with added tax savings and customization.
Through Frec Direct Indexing, customers benefit from:
1.) Up to an additional 2.11% on top of market returns. The powerful algorithms perform daily tax loss harvesting that can capture up to 45% of the value of an investment in capital losses – or $19 in real tax savings for every $100 deposited. When reinvested, this could increase returns by 2.11% annually.
2.) Frec’s license of the S&P indices, enabling them to customize their portfolio by adding or removing companies and sectors.
3.) There is a flat 0.10% fee for direct indexing, priced similarly to buying an ETF directly, compared to some robo-advisors charging .25% for basic index investing or a wealth advisor, who could charge up to 1%5 for direct indexing.
Frec also announced:
1.) Frec Treasury, offering up to 5.02% on cash. Highly liquid, low-risk, and comes with insurance7 – customers can connect their bank account, set a maximum threshold, and have excess cash automatically transferred into high-earning treasury funds. Customers can also pay credit cards directly from Frec Treasury.
2.) Portfolio lines of credit, enabling customers to borrow up to a certain percentage of their stock holdings without a complicated setup.8
3.) A partnership with AngelList, powering money market funds natively for venture capital funds. AngelList venture funds can earn a yield on their cash in money market funds through Frec.
4.) Frec also revealed it has $26.4 million in seed and Series A funding led by Greylock with participation from Social Leverage and others.
KEY QUOTE:
“We built Frec for the financially-savvy who want access to more sophisticated products than are currently offered by existing retail investment platforms, and have qualms about working with expensive wealth managers and old-school brokerages with complicated UI. We made it our mission to build a modern, self-service platform that enables access to advanced financial products, like direct indexing, portfolio lines of credit, and high yield treasury funds to help them stay invested, even in a volatile market.”
- Mo Al Adham, founder of Frec
“Frec is on the precipice of truly democratizing access to sophisticated investment products, so for us, getting into business with them was a no brainer. With analysts predicting that direct indexing will grow at a higher rate than ETFs and Mutual Funds over the next five years, Frec couldn’t be launching at a better time. Mo is a visionary founder, and I am excited to continue partnering with him and the Frec team on their vision.”
- Josh McFarland, Venture Partner, Greylock
