Long short

List of tax-aware long short providers: 2026 comparison

19 min read

Updated Jul 10, 2026

A side-by-side comparison of the major US providers offering tax-aware long short strategies. Fees, minimums, custodians, and access. Current as of publication date.

Summary

Five providers frequently referenced in industry discussion of tax-aware Long short strategies are Frec, AQR Flex, Quantinno, Aperio and Cache They differ on three things that may decide whether a given provider is an option for you. First, whether you can invest directly or need an advisor. Second, whether the provider publishes full pricing up front. Third, and new as of April 2026, whether the provider’s custodian can still onboard the leverage tier you want. Schwab and Fidelity both tightened access in April 2026, which changed the picture for providers that custody with them.

What’s changed recently: Schwab and Fidelity restrictions

The week of April 21, 2026 brought significant new restrictions from two of the three major custodians used by long short SMA providers. The situation is still developing.

Charles Schwab, the custodian for Cache and a common custodian for AQR Flex and Aperio accounts at RIA firms, told clients on April 23, 2026 that new enrollments and incoming transfers will be capped at 200/100 leverage. Tiers above 200/100 are no longer available for new accounts on the Schwab platform. Schwab also imposed new minimums of $1 million for Reg T margin accounts and $3 million for portfolio margin accounts, and limited the proportion of any RIA’s assets at Schwab that can sit in long short SMAs to 30%. A Schwab spokesperson confirmed the changes, saying the firm remains “committed to long short SMAs on Schwab’s platform” and that the adjustments are designed to ensure operational sustainability (Bloomberg, April 23, 2026; AdvisorHub, April 24, 2026; Citywire, April 23, 2026).

Fidelity Investments, another major custodian for Long Short SMAs, paused new account openings in late 2025. The pause was extended in early 2026 and reportedly remains indefinite (Citywire, December 15, 2025; Citywire, January 8, 2026; Citywire, February 19, 2026).

Apex Clearing, Frec’s custodian, has not announced similar restrictions as of the date this article was published.

Custodian availability determines whether a provider can onboard you at the leverage level you want. Investors seeking tiers above 200/100 from providers that custody at Schwab or Fidelity may face restrictions that did not exist a few months ago. Frec, which custodies at Apex, continues to offer all three of its leverage tiers (140/40, 200/100, and 250/150) to new accounts.

Custodian policies can change with little notice. Confirm current availability directly with any provider before making a decision.

Who this article is for

Tax-aware long short has become one of the fastest-growing corners of taxable investing. AQR alone reports roughly $68.8 billion in long short tax-aware SMAs and commingled vehicles. On its Q1 2026 earnings call, Schwab disclosed that client margin loan balances grew 13% quarter over quarter to nearly $127 billion, citing continued interest in long short strategies as a contributing factor. Which is the context for why custodians are now tightening access.

Providers in the tax-aware long short SMA space generally highlight two potential benefits: the opportunity to generate pre-tax alpha with the goal of outperforming the benchmark index, and the ability to harvest losses on both the long and short sides of the portfolio, and those losses may be used to offset capital gains realized elsewhere, such as from a business sale, RSU vesting, a real estate exit, or a concentrated stock position. What differs is access, transparency, fit, and user experience. This article compares Frec, Cache, AQR, Quantinno, and Aperio on fees, minimums, access, structure, transparency, and current custodian availability.

At a glance: fees, minimums, access, and custodian status

Provider	Minimum account size	Highest known leverage for new customers	AUM fee	Post tax financing cost*	Direct access	Fees public	Custodian status (April 2026)
Frec	140/40: $100k 200/100 & 250/150: $500k	250/150	140/40: 0.50%; 200/100: 1.00%; 250/150: 1.30%	140/40: 0.23% 200/100: 0.57% 250/150: 0.86%	Yes	Yes	Apex, normal operations
Cache/BKLN	130/30 & 145/45: $1m 175/75 & 200/100: $3m	200/100	130/30: .50%; 145/45: 0.60%; 175/75: 0.75%; 200/100: 1.00%	130/30: 0.17% 145/45: 0.26% 175/75: 0.43% 200/100: 0.57%	Yes	Yes	Schwab, new enrollments capped at 200/100
AQR Flex	$1-$3m	200/100	Not publicly disclosed	Not disclosed	No (advisor only)	No	Varies by advisor custodian; Schwab and Fidelity accounts subject to new restrictions
Quantinno DEALS™	$1-$3m	200/100	Not publicly disclosed	Not disclosed	No (advisor only)	No	Varies by advisor custodian
Aperio (BlackRock)	$1-$3m	200/100	~0.55% (published on US Large Cap 130-30 Quality Value; others not disclosed)	Not disclosed	No (advisor only)	Partial	Fidelity (new accounts suspended) and Schwab (new 200/100 cap)

*Post-tax financing cost is gross financing cost minus tax deductions from financing expenses using a 40% marginal tax rate. Actual after-tax costs depend on individual tax circumstances, consult your tax advisor. As a percentage of total assets, Frec’s pre-tax financing cost is 0.38% for 140/40, 0.95% for 200/100, and 1.425% for 250/150 and Cache’s pre-tax financing cost is 0.28% for 130/30; 0.43% for 145/45; 0.71% for 175/75; and 0.95% for 200/100.

Frec Long Short Direct Indexing

Frec is a San Francisco fintech that makes direct indexing and long short direct indexing available to self-directed investors, with no human advisor intermediary. The firm operates two regulated subsidiaries: Frec Securities LLC (broker-dealer, FINRA/SIPC member) and Frec Advisers LLC (SEC-registered investment adviser, fiduciary). Frec is backed by Greylock and, as of April 2026, manages over $1.25 billion across its products, with growth accelerated by the October 2025 launch of long short direct indexing.

Three leverage tiers are available, benchmarked to the Russell 1000, S&P 500, MSCI World, or MSCI AQWI. The 140/40 tier starts at a $100,000 minimum, with a 0.50% advisory fee and a 0.23% post-tax financing cost. The 200/100 tier starts at $500,000, with a 1.00% advisory fee and a 0.57% post-tax financing cost. The 250/150 tier starts at $500,000, with a 1.30% AUM fee and a 0.86% post-tax financing cost*. These are the all-in numbers published on Frec’s website. Frec does not have a human advisor fee layered on top of strategy costs.

As of April 24, 2026, and based on publicly reported information about recent custodian restrictions, Frec is the only US provider in this comparison offering 250/150 leverage to new accounts.

Portfolio construction uses MSCI Barra risk models. Investors choose a single factor tilt (growth, value, or quality) and can switch at any time. Factor definitions follow standard Barra conventions.

Frec’s long short direct indexing white paper presents detailed methodology and simulation data for its higher-leverage strategies, benchmarked to the Russell 1000, which is the index used at product launch. Three additional benchmarks have since been added, each reflecting different outcomes. The paper covers 41 historical simulations, each beginning quarterly between April 2005 and March 2015, running over 10-year holding periods, and drawing on market data through February 2025. You can view a live demo running with real funds here.

The simulations produced the following hypothetical after-tax excess returns:

Strategy	Growth	Value	Quality
140/40	2.93%	3.00%	3.19%
200/100	5.37%	N/A	6.44%
250/150	6.75%	N/A	8.49%

We do not offer a value tilt for the 200/100 and 250/150 strategies. All results are hypothetical and do not represent actual client results.

Because Frec runs both classic direct indexing and long short on a single platform so the long side of a long short portfolio can transition directly into a classic direct index without a full liquidation event when an investor is ready to deleverage. Frec has published a separate white paper on deleveraging from long short direct indexing that outlines three deleveraging paths (gradual, cash contribution, and immediate unwind), with tax impact simulations for each. Investors can also borrow against their long short portfolio through Frec’s portfolio line of credit. You must have a portfolio margin account requiring a minimum balance of $500,000 to borrow against a long short portfolio and the amount you can borrow depends on the strategy you’re invested in.

Assets are custodied at Apex Clearing Corporation, an SEC-registered broker-dealer and FINRA/SIPC member. Apex Clearing is a wholly-owned subsidiary of Apex Fintech Solutions, which reports over $200 billion in assets across more than 22 million brokerage accounts globally (Apex Fintech Solutions/State Street partnership press release, September 3, 2025). Frec is a member of SIPC. Securities in your account are protected up to $500,00, with additional excess insurance through Apex. For details, please see www. sipc.org or reach out to request a brochure.

Frec began onboarding long short customers in late October 2025, so its live track record is shorter than some of the incumbents. The published simulations, methodology, and deleveraging research are available for independent review. Tax reporting is a consolidated 1099.

Cache/Brooklyn Investment Group (BKLN)

Cache is a client-facing platform for tax-aware investing. The Cache Long Short Program is sponsored by Cache Advisors LLC, an SEC-registered investment adviser and wholly-owned subsidiary of Cache Financials, Inc. Cache Advisors retains Brooklyn Investment Group LLC (BKLN) as sub-adviser on the program. As of May 1, 2026, BKLN completed a merger with Nuveen Asset Management, LLC. BKLN is a separate SEC-registered investment adviser that handles portfolio construction, tax-aware execution, and day-to-day trading under this sub-advisory arrangement (source: Cache Advisors Long Short Client Disclosure Document). BKLN also works with other platforms, including a tax-advantaged Long Short SMA partnership with Nuveen for the advisor market. Cache Financials additionally owns Cache Securities LLC, a broker-dealer and FINRA/SIPC member. Cache’s original and largest product line is exchange funds, custodied at BNY Mellon. The Cache Long Short product is custodied separately at Schwab.

The strategy is a separately managed account with leverage levels up to 200/100 and account minimums starting at $1,000,000. Advisory fees run 0.50% to 1.0%, financing costs run 0.17% to .57% post-tax, and fees scale with actual leverage deployed. Like Frec, Cache publishes its full fee schedule.

Cache is directly affected by Schwab’s April 23, 2026 restrictions. New Cache enrollments and incoming transfers are now capped at 200/100 leverage. Higher leverage tiers that Cache previously marketed, including 250/150, are not available for new accounts on the Schwab platform as of that date. Cache continues to operate for accounts already opened, and Schwab has publicly stated it remains committed to the long short SMA category on its platform.

BKLN, as the sub-adviser to Cache’s strategies, employs a multi-factor alpha model that seeks pre-tax excess returns through active stock selection, with tax-aware implementation layered on top. The Cache model seeks to systematically tilt a portfolio toward characteristics that have historically been associated with outperformance. Investors can fund with cash, a concentrated stock, baskets, ETFs, or mutual funds. Frec and Aperio, use a factor tilt construction focused on pre-tax alpha around a benchmark while also aiming to generate tax losses.

Cache’s long short AUM is not separately disclosed by either Cache or BKLN. For context on the two parent businesses, BKLN reports approximately $4 billion in tax-aware SMA strategies firm-wide as of year-end 2025 across all its distribution channels (Cache, Nuveen, and direct advisor relationships), per Cache’s published materials. Cache Financials separately reported that its Cache Exchange Funds business scaled from roughly $290 million to over $1 billion in platform assets during 2025 (Cache 2025 Review press release, January 27, 2026), though that figure refers specifically to the exchange fund product line, which is a separate offering from Cache Long Short. Neither figure tells you how much of Cache’s long short AUM sits at Schwab under the Cache brand. Direct-to-consumer enrollment is available through Cache’s portal. Tax reporting is a 1099.

AQR Flex

AQR Capital Management, founded in 1998, is one of the most prominent providers in the tax-aware long short category. AQR Flex (also called Flex SMA) is the firm’s long short equity separately managed account. Per AQR’s own disclosure, the firm manages approximately $68.8 billion in long short tax-aware private commingled vehicles and separately managed accounts (AQR Learning Center, Tax-Aware Investing, as of March 31, 2026). AQR has published peer-reviewed research on tax-aware long short mechanics, with formal research in this area dating to 2011, and maintains live GIPS (Global Investment Performance Standards) composites.

AQR Flex is available only through registered investment advisers and wirehouses. There is no direct-to-consumer path. Accredited investor status is typically required. Fees are not publicly disclosed. Investors negotiate pricing through their advisor, and the advisor layers its own fee on top of AQR’s management fee and financing costs. Total cost to the investor varies based on the advisor’s pricing, and two investors in the same strategy at different firms may pay materially different amounts.

AQR accounts custody at a range of platforms. Accounts held at Schwab are subject to Schwab’s April 2026 restrictions on new enrollments (the 200/100 cap, the new minimums, and the 30% concentration limit per RIA). Accounts held at Fidelity cannot currently open as new long short SMAs. Advisors using other custodians may still be able to open higher-leverage accounts. Prospective investors should ask their advisor which custodian their AQR Flex account would sit at and what leverage tiers are currently available there.

Before investing, prospective clients should ask their advisor for a written all-in fee breakdown including AQR’s management fee, the financing cost, any platform fee, and the advisor’s own fee.

Customization includes benchmark selection, sector constraints, and ESG screening. Funding can be cash or an existing portfolio transition. Tax reporting for Flex SMA is a 1099. AQR separately offers tax-aware alternatives through limited partnership structures (K-1 reporting), with different liquidity terms and eligibility thresholds.

Quantinno DEALS

Quantinno Capital Management LP (SEC-registered investment adviser, CRD 298733) specializes in tax-aware long short strategies through managed accounts. The firm reports over $48.4 billion in assets across more than 10,600 accounts as of March 31, 2026 (Quantinno website, 2026). This is firm-wide; tax-aware long short-specific AUM is not separately disclosed in Quantinno’s public materials.

Quantinno’s platform is called D-E-A-L-S™ (Direct Equity Active Long Short, per Quantinno’s Form CRS) and includes three variants. DEALS Core builds a tax-efficient core equity portfolio with a long short extension, designed to recharge tax benefits when long-only harvesting has been exhausted. DEALS Exchange systematically transitions concentrated positions into diversified portfolios in a tax-efficient manner. DEALS Overlay adds a long and short overlay on top of existing holdings to generate tax benefits without disturbing the underlying portfolio. Frec has a Diversify product that is comparable to DEALS Exchange, worth checking out too.

Quantinno is available only through financial advisors. Minimums and fees are not disclosed in Quantinno’s public-facing materials. Minimums are established in the investment management agreement with each adviser relationship, and advisor fees are typically layered on top of Quantinno’s management fee.

Custody varies by advisor relationship, so current availability depends on which custodian any particular Quantinno account would sit at. Quantinno accounts at Schwab are subject to Schwab’s April 2026 restrictions, and accounts at Fidelity cannot currently open as new long short SMAs. Prospective investors should ask their advisor which custodian would be used and confirm current onboarding availability there.

Quantinno publishes insights and conceptual research on its website but does not make detailed methodology, simulation data, or deleveraging analysis publicly available for independent review. The DEALS platform launched in 2021 (Quantinno website, 2026). Tax reporting is a 1099.

Aperio (BlackRock)

Aperio Group is a wholly-owned subsidiary of BlackRock, acquired in February 2021. The firm has roughly 25 years of experience in tax-managed accounts and manages approximately $149 billion across tax-managed accounts, a figure that includes long-only direct indexing, not just long short. Aperio’s long short strategy launched in January 2023 (BlackRock, “Weathering market volatility with loss harvesting,” May 2025).

BlackRock reports that Aperio harvested approximately $3 billion in losses across all tax-managed accounts in 2025 (BlackRock, “Harvesting losses in a strong market,” January 2026). This figure spans long-only and long short accounts combined and does not represent a long short-specific or per-account result. Long short-specific AUM and track records are not separately disclosed in Aperio’s public materials.

Aperio is only available through financial advisors, with a $1 million minimum on most strategies. They state in their Form CRS that they can manage smaller portfolios through arrangements but add they typically require a minimum $3,500 annual fee. Aperio custodies primarily at Fidelity and Schwab. Both custodians are now restricting new long short SMA onboarding. Fidelity has suspended new long short accounts indefinitely, and Schwab has capped new enrollments at 200/100 leverage with new minimums and concentration limits. This makes current onboarding availability for Aperio’s long short strategies particularly dependent on the custodian relationships. Advisors should confirm current status directly with Aperio before recommending.

Several variants exist, including the long short SMA, the US Large Cap 130-30 Quality Value Strategy (composite inception September 2022, published management fee of 0.55%), and the Long Short Tax-Managed Dynamic Factor Strategy. Fees on most strategies are not publicly disclosed, and advisor fees are layered on top.

Portfolio construction uses MSCI Barra optimization with ESG screens, exclusion lists, and factor tilts. Tax reporting is a 1099.

Structure and scale

Provider	Custodian(s)	Provider AUM reference
Frec	Apex Clearing	Over $1B across all products (April 2026)
Cache/BKLN	Charles Schwab	Cache Long Short AUM not separately disclosed. Context: BKLN tax-aware SMAs firm-wide ~$4B (YE 2025); Cache Exchange Funds platform $1B+ (Jan 2026, a separate product line)
AQR	Multiple (including Schwab, Fidelity)	~$68.8B in long short tax-aware SMAs and commingled vehicles (3/31/2026)
Quantinno	Multiple (including Schwab, Fidelity)	$48.4B firm-wide across 10,600+ accounts (3/31/2026). Long short-specific AUM not separately disclosed.
Aperio (BlackRock)	Fidelity, Schwab	~$149B across all tax-managed accounts (includes long-only direct indexing) (12/31/2025).

AUM figures are not directly comparable. AQR’s number is specifically long short tax-aware SMAs and commingled vehicles. Quantinno’s is firm-wide. Aperio’s is firm-wide tax-managed including long-only direct indexing. Frec’s is platform-wide across all products. Cache’s is total platform including exchange funds. Ask each provider for long short-specific AUM and inception date if that comparison matters to you.

How to choose a provider

Tax-aware long short is more complex and more expensive than a passive index fund, and the benefit depends heavily on your tax situation. A few questions worth working through.

Can your preferred provider actually onboard you right now? Schwab has capped new long short SMA enrollments at 200/100 leverage, which affects Cache and any AQR, Quantinno, or Aperio account that would custody at Schwab. Fidelity has paused new long short SMA accounts entirely. Frec, which custodies at Apex, is not subject to these restrictions. If you want 250/150 leverage specifically, confirm with any provider that their custodian can open that account today.

Can you see the full price? Frec and Cache publish complete fee schedules (advisory fee, financing cost, everything) before you sign up. AQR, Quantinno, and Aperio do not publicly disclose most of their pricing, which means you cannot comparison-shop before engaging an advisor.

Do you need an advisor in the chain? Frec and Cache let you enroll directly. AQR, Quantinno, and Aperio are available only through financial advisors or wirehouses, with an advisor fee layered on top. If you already work with an advisor and value that relationship, the advisor-gated providers are designed for you. If you do not, the advisor fee may be unnecessary overhead, often 0.50% to 1.00% annually on top of strategy costs.

What minimum can you meet? $100,000 gets you into Frec’s 140/40 tier and nothing else in this comparison. $500,000 adds Frec’s higher-leverage tiers. Aperio and Cache have a $1 million published minimum. AQR Flex typically requires accredited investor status with minimums set through the advisor relationship, and Quantinno does not publicly disclose its minimum. If you are below $1,000,000 Frec is the only provider in this comparison with a publicly available product that accepts your account.

What’s driving your capital gains? The capital gains you’d like to offset (from a business sale, secondary offering, RSU vesting, real estate exit, or concentrated stock) is one factor to consider when selecting leverage choice and account size. Higher leverage may generate more losses per dollar invested but costs more and carries more risk. If your gain stream is modest, a lower-leverage tier or a long-only direct index may deliver better after-tax economics.

How do you exit? Long Short defers taxes, it does not eliminate them. Unwinding a portfolio with large unrealized gains and short positions requires planning. Ask each provider three specific things: how gradual deleveraging works, whether the long side can transition into a long-only portfolio without full liquidation, and how much of your harvested losses are consumed in the process. Frec publishes a white paper modeling three exit paths with tax impact simulations for each. The other providers do not make equivalent public analysis available.

How much public documentation exists? AQR has peer-reviewed academic research. Frec publishes detailed product-level methodology and simulation data directly on its site, including multiple white papers (long short construction and deleveraging). Cache publishes a methodology overview. Aperio and Quantinno publish comparatively little public-facing methodology.

Does scale matter? The incumbents are larger. AQR reports roughly $68.8 billion in long short tax-aware SMAs and commingled vehicles. Quantinno reports $48.4 billion firm-wide. Aperio reports $110 billion across all tax-managed accounts, a figure that includes long-only direct indexing. Frec is at over $1 billion across all of its products. For Cache Long Short specifically, AUM is not disclosed; BKLN reports $4 billion in tax-aware SMAs firm-wide across all its distribution channels, and Cache’s separate Exchange Funds business crossed $1 billion in January 2026.

Who custodies your assets? Cache uses Schwab. Frec uses Apex Clearing. AQR, Quantinno, and Aperio vary across Schwab, Fidelity, and potentially others. Schwab and Fidelity are the two largest RIA custodians. Apex Fintech Solutions (Apex Clearing’s parent) reports over $200 billion in assets across more than 22 million brokerage accounts globally. All are FINRA/SIPC member broker-dealers with standard SIPC protection. As of April 2026, Schwab and Fidelity have introduced new restrictions on long short SMA onboarding that Apex has not.

Information about AQR, Quantinno, Aperio and Cache and their strategies have been obtained from publicly available sources. Frec has not independently verified this information and it may not reflect current offerings, fees, or performance. This comparison was produced by Frec, which has financial interest in its own products. Readers should consider that this has potential bias when evaluating the information presented. Fees, minimums, AUM figures, and third-party data are compiled from publicly available provider materials and news reporting as of the dates cited. Frec makes no representation as to ongoing accuracy and has no affiliation with Cache, AQR, Quantinno, or Aperio / BlackRock. Information about custodian restrictions reflects publicly reported developments as of April 24, 2026. Custodian policies can change without notice. Confirm current onboarding status and terms directly with each provider before making any investment decision.

Simulation results discussed are hypothetical, do not reflect actual investment results, and are not a guarantee of future results. Please consult your tax advisor or CPA for guidance specific to your tax situation.

The long short strategies involve a higher level of risk than traditional long-only investing, including the use of portfolio margin and leverage. Borrowing against these strategies amplifies both potential gains and losses and may result in losses exceeding your initial investment.

Sources

Custodian restrictions (2025–2026)

Custodian earnings data (Q1 2026)

Frec materials

Cache/BKLN materials

AQR materials

Quantinno materials

Aperio (BlackRock) materials

Custodian and entity references

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