Mo Al Adham

We’re very excited to share that Frec has now surpassed $1 billion in customer assets on the platform. 🚀🚀🚀 The speed of compounding is truly astounding. It took us one year to reach our first $100 million, another year and a bit to get to $550 million, and less than four months from there to reach $1 billion. And here’s the most surprising metric: we added more than $80 million last week alone. We always had conviction, but to the rest of the world, this milestone marks the moment Frec goes from “there’s something here” to “that is a real business.” We’ve crossed the chasm. Tax-aware investing delivered directly to customers is here to stay. We’re deeply grateful to the thousands of customers who placed an enormous amount of trust in us. And I’m also lucky to be working alongside an incredible team that brings so much grit, customer obsession, and passion to our mission every day. $10 billion and beyond, here we come! PS - We’re hiring backend and frontend software engineers, quant researchers, and quant developers. Ping me if interested.

Past performance is not a guarantee of future results. Reference for 2025 returns: msci.com/documents/1019…

Many of our customers want more international indices on Frec, and today we’re launching 5 new options: MSCI ACWI ADR, MSCI ACWI ADR Long short, MSCI World ADR, MSCI World ADR Long short, and MSCI EAFE ADR. Historically, these ADR indices have closely tracked their non-ADR parent benchmarks. For example, in 2025, the MSCI ACWI ADR index showed a 22.36% return (vs. 22.87% for the parent benchmark), the MSCI World ADR returned 21.17% (vs. 21.60%), and the MSCI EAFE ADR returned 32.23% (vs. 31.89%). We also rolled out a major upgrade to our trading infrastructure. We now trade over-the-counter (OTC) ADRs for our direct index strategies. This gives customers broader market exposure and the potential to significantly reduce tracking error due to the ability to invest in a greater number of the index’s underlying positions. Because liquidity varies widely across the OTC ADR market, we put a lot of work into analyzing these assets and developing a framework to assess their tradeability. This new logic seeks to facilitate OTC ADR trades in a highly cost-efficient way, which ultimately means more efficient portfolio construction for our customers from both a tracking risk and tax perspective. Existing S&P Emerging and Developed Market ADR indices on Frec will also benefit from the upgrade. More details on the new indices: - ACWI, which stands for the All Country World Index, consists of large and mid cap companies in the US, developed, and emerging markets. - World consists of large and mid cap companies in the US and developed markets. - EAFE consists of large and mid cap developed market companies. We’re excited to offer these new options for our customers.

@bernhardsson @generalcatalyst @Redpoint Congrats!!

Today we're announcing our Series C funding: $355M at a $4.65B valuation, led by some great investors @generalcatalyst and @Redpoint. We've had insane growth in the last year, but we're still very early. So proud of the team and what we have built so far!

A customer recently switched to Frec's Long Short Direct Index from a fund called the Gotham Triple Advantage S&P 500 Strategy. He stopped by the office last week and shared why he made the move. For context, there are two primary ways investors put money to work in long short funds: a brokerage account (some call this an “SMA”) like on Frec, or through a fund. It turns out, there’s a big limitation to investing through a fund. If you invest $1m and the fund allocates you $250k–$350k of capital losses, those losses may offset your capital gains elsewhere. But the catch is that these K-1 losses are limited by the investor’s tax basis in the partnership. A partner cannot deduct losses beyond their contribution. Example: Year 0: customer invests $1m . The customer’s tax basis roughly starts at $1m, subject to liability allocations and other adjustments. Year 1: fund allocates $300k of capital losses. The customer can use those losses. The tax basis drops to ~$700k. Year 2: another $300k of losses. Tax basis drops to ~$400k. Year 3: another $300k . Tax basis drops to ~$100k. Year 4: another $300k . Only ~$100k is usable; the extra ~$200k is suspended because the customer lacks basis. A brokerage account can generate more tax alpha because realized losses are reported on a 1099 and can be used to offset gains without those partnership tax-basis restrictions. However, investing through a brokerage account risks creating wash sales if the customer (or their spouse) trades individual names too. This is why Frec gives customers many controls like trade restrictions, do not short lists, and ingests self-directed trades when rebalancing portfolios to avoid wash sales.

Tax loss harvesting is pretty insane I'm up almost 10% for the year simply investing in S&P 500 But because I use a direct indexing strategy instead of buying an ETF, I have 50K in "tax losses" I can use to offset the gains from selling my startup Feels like a cheat code

@arpwal Yes, we account for wash sales. If a stock is sold, a correlated but not substantially identical basket is purchased

@maladham Very cool! So, the wash rule is baked into Frec's system? Can you share an example of how that would have worked above?

Today’s financial headline is: “S&P 500 continues higher after benchmark wipes out Iran war losses.” The S&P 500 fell from a peak of roughly 6,945 at the end of February to a low of about 6,343 at the end of March, a decline of 8.6% in just one month. True story: a customer deposited $5 million into a @frecfinance 140/40 Long short direct index near the top, on February 27. When the market started declining in mid-March, he messaged me: “I invested at the absolute worst possible time.” I told him, “I can’t give investment advice, but if history is any guide, you’ll likely be fine if you stay invested.” He stayed the course and let the direct index do its job. Today, he has fully recovered and is up 2% on his investment. On top of that, he has harvested $195,000 in losses. He is also outperforming the benchmark by more than 1% in pre-tax excess returns because of the Quality tilt he applied to his index. Quality stocks held up better during the dip. These sharp V-shaped drawdowns and recoveries are a great example of why someone might choose a direct index over an ETF. If this customer had invested in an ETF instead, he would have faced two choices. He could have tried to sell and buy back manually during the drawdown to harvest losses, which is harder than it sounds. I know customers who sold near the bottom, waited too long to buy back in, and missed the recovery. Or he could have simply stayed invested in the ETF and missed the opportunity to capture losses altogether. In this case, the direct index harvested $195,000 in losses, about 4% of the original investment, which could translate into roughly $80,000 in tax savings for a California resident.

@chrisbone_r @ankurnagpal Accounts are custodied at Apex Clearing, and are covered by SIPC

@ankurnagpal @maladham Are accounts FDIC insured? This is intriguing

@temfr13 tax-aware investing for self-directed investors

@maladham What do you guys do?

We’re very excited to share that Frec has now surpassed $1 billion in customer assets on the platform. 🚀🚀🚀 The speed of compounding is truly astounding. It took us one year to reach our first $100 million, another year and a bit to get to $550 million, and less than four months from there to reach $1 billion. And here’s the most surprising metric: we added more than $80 million last week alone. We always had conviction, but to the rest of the world, this milestone marks the moment Frec goes from “there’s something here” to “that is a real business.” We’ve crossed the chasm. Tax-aware investing delivered directly to customers is here to stay. We’re deeply grateful to the thousands of customers who placed an enormous amount of trust in us. And I’m also lucky to be working alongside an incredible team that brings so much grit, customer obsession, and passion to our mission every day. $10 billion and beyond, here we come! PS - We’re hiring backend and frontend software engineers, quant researchers, and quant developers. Ping me if interested.

@frecfinance @howardlindzon 🤣

@howardlindzon @maladham internally, we refer to him as "mo money"

@christinagee12 @frecfinance So glad to have you on Frec. The feedback you have been sharing made us so much better. Thanks Christina!

Notice anything on the @frecfinance website 👀? I've been using Frec now for 2+ years and have loved the slick UX, direct indexing & customer support. the CEO @maladham is one of the most users-first founders I've come across. Sign up and get $250: frec.com/referral/CGAHC…

From my research... I think that low cost direct index + tax loss harvesting look like a great product. I'm moving over to @frecfinance, here's $250 if you do too: frec.com/referral/IOACH…

@pandemona @particle_news Awesome! Congrats!!

An incredible honor! Today, @particle_news is the App of the Day 🤩🤩

Financial advisors wear many hats for their clients, but I think the job is increasingly at risk. Here’s my understanding of the core "jobs to be done" of an advisor: . Raise awareness: introduce products clients may not know about, like a portfolio line of credit. . Give access: provide access to products clients may not be able to get on their own, like private investments. . Educate: explain financial concepts in a way clients can actually understand, like tax-loss harvesting. . Execute: handle the operational work, like rebalancing a portfolio. . Advise: serve as a sounding board for tax, estate, and broader planning decisions. As more of these jobs are fulfilled through other channels, the need for a traditional advisor starts to fade, especially for millennials and younger generations. My view is that these five jobs will increasingly be handled by a combination of AI and modern fintech products. Fintech products alone were not enough. Back in 2009, many people thought advisors would disappear when the first wave of robo-advisors launched. The idea was right there in the name: automate the advisor. But that alone did not eliminate the role. What was missing was AI. AI is especially strong at handling awareness, education, and, to a large extent, advice. Many of our customers tell me, “I uploaded your white paper to Claude and asked it all my questions.” We’re also seeing requests to open up our data so customers can query their finances directly. Some are even building their own AI-powered tools to fill gaps we haven’t gotten around to yet, like surfacing unrealized gains and losses in their portfolios. And it’s not just younger hobbyists. We’re seeing large eight-figure accounts do the same: using AI for discovery, questions, and advice, while executing strategies that used to be available only through an advisor on platforms like Frec.

@TaxAlphaInsider @nathanferickson Sure, that's what I meant (SMA by AQR, custodied by Fidelity). The ACAT transfers were pretty smooth, no surprises. Longs, shorts, and margin debt all transferred smoothly.

@maladham @nathanferickson The fidelity part, pls. lol.

"complete rug pull" ... advisers telling me Fidelity is dramatically raising financing costs for tax aware long short in coming months. DM if you have a story to share.

@TaxAlphaInsider @nathanferickson We've done a number of transitions from AQR/Fidelity to Frec. Happy to chime in with learnings!

@nathanferickson First task for my tax-aware long/short practitioner group (100+ members) is establishing best practices here. Time to get this operational stuff out into the open.

Plenty of customers selling stock at a large gain (e.g., upcoming Anthropic and Waymo tender offers) think they get a free pass on paying capital gains taxes until the following April. It turns out that taxes are generally expected to be paid throughout the year, even if the return itself is not due until the following April. When a big gain hits and a customer hasn’t prepaid enough via withholding from their paycheck, they may need to make estimated tax payments by the quarterly deadlines to avoid penalties. Quick example: A customer sells shares in a tender offer and realizes a $300k gain. If they live in California and are in a high bracket, they might owe ~$100k in combined federal/state tax. If tax withholding is only covering their “normal” income tax from their salary, they’ll likely want to send a ~$25k federal estimated payment by April 15, June 15, Sep 15, and next year’s Jan 15. California uses different installment percentages (30% / 40% / 0% / 30%) on those same dates. If they miss these payments, the IRS can assess an underpayment penalty that’s basically interest on what should’ve been paid earlier. The rate moves quarterly (it’s 7% annualized for Q1 2026, compounded daily), and California can add its own estimated penalty/interest too. There’s a caveat that may reduce that amount depending on the customer’s situation, known as the “safe harbor” rules. Customers can often avoid the penalty if they’ve prepaid the smaller of (a) 90% of this year’s tax, or (b) 100% of last year’s tax (110% for higher-income taxpayers). Worth checking with a CPA especially if last year’s tax was much smaller than this year’s. Customers who have carried-forward capital losses can offset some or all of a current gain which can reduce (or eliminate) the incremental estimated tax they would otherwise need to send. Another reason I’m a fan of systematically building a “loss bank” via direct indexing. Not tax advice - just a common misconception I keep seeing.

@leifthunder Yes there is, on Frec.

There's a better way to buy an index. Direct indexing comes with tax-loss harvesting, custom rebalancing and more. And with Generated Assets you can use AI to turn any idea into an investible index.

Can grow a beard and eat a whole friend chicken at lunch.

Sandeep demonstrating that he can overcome any obstacle.

.@sandeepsripada and I took this picture on Dec 2, 2022, one year before our launch. We were on a real estate tour for a Frec SF office when a colleague messaged on Slack, “We just got our first $2m deposit!” Sandeep and I were so happy and took this selfie to commemorate the occasion. Back story on how we met. Sandeep and I worked together at Twitter around 2016. I was the PM and he was the tech lead on a revenue team. Every few months at lunch, we manually rebalanced shares from 10’s of companies in what used to be called the “Bessemer Venture Partners's Cloud Index” in our individual Schwab accounts. We paid a ton in taxes. We used a messy spreadsheet to manage our trades (screenshot attached). Frec was born from this painful experience. When I left Twitter to start Frec, Sandeep was my first call. “Funding is secured. Are you in?” And he was, with no hesitation. Sandeep is the best engineering leader I’ve known. He is still hands on building and coding, cares deeply about the team and company, and has killer product instincts. Not to mention, he has many unique abilities - as you’ll see in my comments below. We’re growing the engineering team and hiring senior engineers (7+ years). AUM is scaling fast, and we need builders who can ship new products, scale systems, and help recruit great talent. We’re a small team, so you’d have lots of ownership. Message me or Sandeep Sripada if you’re interested. Fun fact: that beta customer churned a few weeks later because Frec was bare bones at the time. We went heads down for 10 months (during the Fintech winter), built the platform and launched in Oct 2023. Since then, less than 5% of all funded accounts have churned.