Traditional tax-loss harvesting and direct indexing both rely on selling stocks that have declined. That works well early on, but over time, as markets rise, portfolios fill with appreciated positions and harvestable losses become scarce. The strategy gradually stalls.
Some direct indexing providers harvest when rebalancing back to a benchmark, which can extend the runway, but often generates gains as positions are trimmed toward target weights.
Cache Long/Short addresses this by adding short positions. Shorts lose value when stocks rise, so the portfolio may have a source of harvestable losses even in strong bull markets. The strategy seeks to produce harvestable losses whether markets rise, fall, or move sideways, rather than depending primarily on downturns.