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. Both seek to generate tax losses 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 at Charles Schwab, sub-advised by Brooklyn Investment Group, with a $500,000 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.
Here's how the two compare on each of those dimensions.
Start with the implementation, not the category
"Tax-aware long/short" is a product description, not a shorthand for interchangeable products. Two products can fit inside that description and still differ meaningfully on how they're managed.
The useful question isn't whether both products can harvest losses. It's how they're built underneath.
1. The portfolio management
The first real difference is who's running the strategy.
Cache Long/Short is built in partnership with Brooklyn Investment Group (BKLN), an SEC-registered investment adviser with an experienced portfolio management and quantitative research team that manages $4B across tax-aware SMAs. Cache brings the strategy to you through a modern, direct platform. Charles Schwab is the custodian. The portfolio runs on a multi-factor alpha model with human oversight.
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 or S&P 500 accordingly.
Both approaches are systematic. The real distinction is what the system is doing, and who's watching it.
Comparison at a glance
2. Custody matters
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’ s 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. 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
3. The evidence base
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 whose mechanics 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 beginning 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. Live results show how it actually behaves, net of borrow availability, financing costs, and execution friction.
4. Flexibility in real accounts
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 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. Extension levels are continuous rather than fixed tiers, so you can size leverage to your actual comfort level and situation.
Frec offers a more standardized experience. The benchmark is Russell 1000 or S&P 500. Extensions come in three fixed tiers. Funding is typically cash or concentrated stock.
Portfolio fit comparison
5. The exit deserves more attention than it usually gets
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. Fees are close enough that structure matters more
Both platforms combine advisory fees with financing costs, and both disclose ranges that depend on your leverage level.
- Cache: roughly 0.77% to 2.68% all-in, pre-tax, disclosed by leverage tier.
- Frec: roughly 1.00% to 2.73% all-in on a comparable pre-tax basis.
The decision isn't really a fee decision. It turns on things fees don't capture: the investment process, the custody framework, how flexible the account is, and what the live track record actually shows.
Who each could serve
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 tilt.
Cache 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 is the better fit.
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.
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