The investor owns the securities directly, which permits customisation such as excluding a sector, managing around a large legacy holding, or harvesting individual losses. It also means the account's tax position is its own rather than inherited from a fund's history.
Transparency is far higher than in a commingled fund: every position and trade is visible daily. For allocators this reduces reliance on the manager's own reporting and removes exposure to other investors' redemptions.
Costs and minimums are the constraints. Minimums typically start in the hundreds of thousands and rise sharply for complex mandates, and small accounts suffer from rounding and trade-allocation effects that a large fund avoids. See direct-indexing and wrap-fee.
Related: direct-indexing, wrap-fee, tax-loss-harvesting, hedge-fund, fund-of-funds, management-fee