Exchange Fund - Detailed Structure

Detailed Structure

  • Fund holding requirements: The fund needs to have at least 20% of its assets in "non-publicly traded" securities or real-estate.
  • For public exchange funds, at least 7 years have to elapse between when an investor deposits their stock and when the basket of stocks is available for them to sell without realizing a step up in basis (paying taxes). However, this is not an issue with private stock exchange funds as the point is diversification, not tax deference.
  • Liquidity: Public funds are generally not marginable. Private funds increase a participants odds of liquidity.

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