June 17 (Reuters) - Nuveen said on Tuesday it is

acquiring Brooklyn Investment Group and its parent technology

company, as the asset manager looks to expand its footprint in

direct indexing, a fast-growing area of the investment

management industry.

Direct indexing replicates a stock index, such as the S&P

500, by directly owning its individual components. This

strategy can offer tax advantages and the flexibility to

customize holdings or adjust exposure to certain stocks or

sectors.

It has gained popularity in recent years, emerging as a

key growth area for asset managers seeking to attract younger,

tax-conscious investors who want greater control over their

portfolios.

Direct indexing assets under management have grown at a

12.7% compound annual growth rate in five years, according to a

note from Morgan Stanley ( MS ).

Firms such as BlackRock ( BLK ) and Vanguard have also made

acquisitions to boost their presence in the space.

Nuveen and Brooklyn had previously partnered in 2023 to

launch a direct indexing portfolio.

Chicago-based Nuveen said it will focus on three key

initiatives in the coming months: integrating its alternatives

and lifetime income capabilities into tax-advantaged offerings,

enhancing the client experience, and serving customers through

the licensing of Brooklyn's proprietary white-labeled technology

Brooklyn is an investment adviser that leverages AI,

institutional-grade portfolio optimization, and automated

tax-loss harvesting - a strategy that helps reduce an investor's

tax bill by selling securities at a loss.

Nuveen, a wholly owned subsidiary of Teachers Insurance and

Annuity Association of America (TIAA) - one of the world's

largest institutional investors - managed $1.3 trillion in

assets as of March 31 and operates in 32 countries.

The company did not disclose the terms of the deal.