Cache Long/Short vs. Frec: Evaluate Long/Short Strategies Side by Side (2026)
Cache Long/Short vs. Frec Long Short Direct Indexing
Two tax-aware long/short strategies: same category, different implementations. Learn what the different structures actually determine.
TL;DR:
- Cache Long/Short and Frec Long Short Direct Indexing both harvest tax losses while keeping you invested, but the similarity stops at the category label.
- Cache is a human-overseen, multi-factor strategy custodied at Schwab with a $1M minimum and continuous leverage sizing.
- Frec is primarily automated at Apex Clearing with a $100K entry point and three leverage tiers.
- The bigger differentiators: Cache has years of live track record through Brooklyn Indexing (part of Nuveen), while Frec's track record is over a shorter period and Cache offers flexible funding, benchmarks, and exit paths.
- For many, fees are likely close enough that they wouldn't be the deciding factor. The right fit depends on account size, portfolio complexity, and whether you want a managed relationship or a self-directed one.
A closer look at the structure behind the strategy
If you're comparing tax-aware long/short strategies, the first pass can be easy to misread.
Cache Long/Short and Frec Long Short Direct Indexing are the two tax-aware long/short strategies built for individual investors in taxable accounts. Both run as separately managed accounts (SMAs). Both seek to generate tax loss harvesting opportunities while keeping you in the market. On the surface, they look like the same product.
Look one level deeper, and the picture changes.
Cache Long/Short is a managed SMA with assets custodied at Charles Schwab & Co, and is sub-advised by Brooklyn Indexing* (BKLN), with a $1M minimum. Frec Long Short Direct Indexing is a fully automated SMA at Apex Clearing, with a $100,000 minimum for the 140/40 tier. That's the starting point. The differences that matter show up in how the strategy is actually run, who's making portfolio decisions, how the leverage is financed, how much flexibility you get in your own account, and whether the track record reflects live money or simulations.
Comparison at a glance
| Dimension | Cache Long/Short | Frec Long Short / Frec Diversify |
|---|---|---|
| Investment approach | Multi-factor alpha model | Single-factor tilt (growth or value) on a broad-market index |
| Decision-making | Portfolio team with investment committee oversight | Fully automated management |
| Primary framing | Pre-tax alpha generation with enhanced tax-loss harvesting | Tax-loss harvesting with factor tilt on an index |
1. Who actually manages each long/short portfolio?
The first real difference is who's running the strategy.
Cache Long/Short is built in partnership with Brooklyn Indexing (BKLN), a subsidiary of Nuveen ($1.4T AUM), the investment arm of TIAA. BKLN is an SEC-registered investment adviser with an experienced portfolio management and quantitative research team that manages $8B+ across tax-aware SMAs.
Frec's Long Short Direct Indexing is fully automated. That's still new ground for a highly leveraged strategy. You pick a factor tilt, growth, quality, or value, and Frec's system builds a portfolio around the Russell 1000, S&P 500, MSCI World ADR, or MSCI ACWI ADR accordingly. Investors looking to use Frec Long Short Diversify can only select between the Russell 1000 or S&P 500.
Both approaches are systematic. The real distinction is what the system is doing, and who's watching it.
2. Where are your assets held, and why does it matter?
In a long/short account, custody isn't a back-office detail. It determines how your leverage is financed, what margin you can access, and how the account behaves when markets get rough.
Cache Long/Short client assets are custodied at Charles Schwab, which has emerged as the largest custodian for this strategy. Schwab is a federally chartered bank and self-clearing broker-dealer with substantial balance sheet assets. Schwab publishes clear rules for Reg T margin and portfolio margin, and Cache discloses the full leverage ladder available under each.
Frec custodies at Apex Clearing, a custody and clearing firm for fintech companies. Its financing is disclosed as a mix of credit facilities and equity assets. Frec's public disclosures around financing structure, margin headroom, and exit mechanics are less explicit.
Custody and financing comparison
| Dimension | Cache / Schwab | Frec / Apex |
|---|---|---|
| Custodian | Charles Schwab | Apex Clearing Corporation |
| Financing base | Primarily Deposit-backed | Credit facility-backed |
| Margin Lending Balance | $100B+ | $1B+ |
| Reg T range | 130/30 extension, with headroom up to 145/45 typically | Not disclosed |
| Portfolio margin range | 175/75 to 200/100 extensions (subject to Schwab approval and collateral) | Fixed tiers (140/40, 200/100, 250/150) |
| Financing transparency | Both pre-tax and post-tax costs disclosed at each leverage level for greater transparency and planning | Financing primarily presented on a post-tax basis (assumed 40% marginal rate), which can understate the gross costs |
3. Evidence: live track record or backtested simulation?
BKLN's tax-aware SMA platform has been running real client money for several years, across multiple market environments. When you evaluate Cache Long/Short, you're looking at a strategy with mechanics that have been pressure-tested by live execution, borrow costs, margin calls, and tax-lot accounting in actual accounts.
Frec's long/short offering was announced in May 2025, with customer onboarding that began in late October 2025. Most of Frec's published performance material draws on backtested simulations from their white paper.
Backtests model how a strategy should behave. Confidence comes in the form of live results that show how a long/short strategy actually behaves, net of borrow availability, financing costs, and execution friction.
4. How flexible is the long/short account?
Most people don't start with cash. You probably have embedded gains, existing holdings you want to keep, and a view on what benchmark you actually want to track.
Cache Long/Short is built around that reality. You can fund with cash, concentrated stock, baskets of stocks, ETFs, or mutual funds, and you can target multiple benchmarks in the same account, blend them, and apply restrictions to what the portfolio can hold.
Portfolio fit comparison
| Dimension | Cache Long/Short | Frec Long Short / Diversify |
|---|---|---|
| Benchmarks | Multiple benchmarks across broad-market, growth, international, fixed income | Russell 1000, S&P 500 (Diversify); Russell 1000, S&P 500, MSCI World, MSCI ACWI (Long Short) |
| Extensions | 130/30, 145/45, 175/75, 200/100 | 140/40, 200/100, 250/150 |
| Funding sources | Stock, baskets of stock, ETFs, mutual funds, cash | Cash and concentrated stock |
| Minimum | $1M (130/30, 145/45); $3M (175/75, 200/100) | $100K (140/40); $500K (200/100, 250/150) |
| Tax reporting | 1099 | 1099 |
5. What happens when you exit the long/short strategy?
A long/short program is typically a transition tool, not a permanent allocation. What you end up owning on the other side matters as much as how the strategy performs while it's running.
Cache builds for that path. The portfolio supports automated deleveraging over time, extension levels can be adjusted as your circumstances change, and the strategy is designed to wind down toward a lower-leverage or long-only posture depending on your goals and account constraints.
6. What matters more when fees are similar?
Both platforms combine advisory fees with financing costs, and both disclose ranges that depend on your leverage level.
| Program | All-in, pre-tax | All-in, post-tax |
|---|---|---|
| Cache Long/Short | 0.78%–1.95% | 0.67%–1.57% |
| Frec Long Short Direct Indexing | 0.88%–2.725% | 0.73%–2.16% |
The decision isn't really a fee decision. It turns on long-term mechanical implications that fees don't capture: the investment process, the custody framework, how flexible the account is, and what the live track record actually shows.
7. When is Cache Long/Short or Frec Long Short a better fit?
Cache and Frec are solving overlapping problems for different investors.
Frec is a strong fit if you want a low-minimum, fully self-directed experience with no human in the loop, you're happy tracking an index with a quality, growth or value factor tilt.
Cache Long/Short is built for investors with larger balances, more complex starting portfolios, and a preference for a managed experience backed by a live track record. If you're sitting on a mix of concentrated stock, ETFs, and mutual funds, want to blend benchmarks or apply restrictions, and want your strategy run by an experienced investment team, Cache Long/Short is the better fit.
The bottom line
Cache and Frec share a category. They don't share an implementation.
The structural differences concentrate in four areas:
- who manages the portfolio
- how custody and financing are structured
- how much real-world operating history underpins the strategy, and
- how much flexibility the account provides.
On each of those, Cache and Frec have made different choices, and those choices are what an investor should compare. If you're evaluating tax-aware long/short strategies, don't stop at "both harvest losses." Ask how each one does it, and what you'd own on the other side.