Question

What is the difference between an exchange fund and a Section 351 exchange

Answer

Both strategies defer capital gains, but they differ in structure. An exchange fund is a private partnership where multiple investors pool appreciated stock, with a seven-year holding period before you can redeem for a diversified basket. A Section 351 exchange transfers stock into a newly formed corporation or exchange-traded fund (ETF), requiring a control group of five or fewer participants and diversification tests limiting any single issuer to 25% and the top five to 50%.

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We exist so you don’t have to worry about money. For more than 40 years, we’ve taken the sophisticated, time-tested approach that many ultra-high net worth individuals use to help manage their financial lives and made it accessible to more families.

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