Nuveen acquires Brooklyn Investment Group in direct indexing push

June 17 (Reuters) - Nuveen said on Tuesday it is acquiring Brooklyn Investment Group and its parent technology company, as the asset manager looks to expand its footprint in direct indexing, a fast-growing area of the investment management industry.

Direct indexing replicates a stock index, such as the S&P 500 .SPX, by directly owning its individual components. This strategy can offer tax advantages and the flexibility to customize holdings or adjust exposure to certain stocks or sectors.

It has gained popularity in recent years, emerging as a key growth area for asset managers seeking to attract younger, tax-conscious investors who want greater control over their portfolios.

Direct indexing assets under management have grown at a 12.7% compound annual growth rate in five years, according to a note from Morgan Stanley.

Firms such as BlackRock BLK.N and Vanguard have also made acquisitions to boost their presence in the space.

Nuveen and Brooklyn had previously partnered in 2023 to launch a direct indexing portfolio.

Chicago-based Nuveen said it will focus on three key initiatives in the coming months: integrating its alternatives and lifetime income capabilities into tax-advantaged offerings, enhancing the client experience, and serving customers through the licensing of Brooklyn’s proprietary white-labeled technology

Brooklyn is an investment adviser that leverages AI, institutional-grade portfolio optimization, and automated tax-loss harvesting — a strategy that helps reduce an investor’s tax bill by selling securities at a loss.

Nuveen, a wholly owned subsidiary of Teachers Insurance and Annuity Association of America (TIAA) — one of the world's largest institutional investors — managed $1.3 trillion in assets as of March 31 and operates in 32 countries.

The company did not disclose the terms of the deal.