In-kind of a big deal: TAX launches soon
The Cambria Tax Aware ETF should launch on Weds Dec 18, 2024
Ron Burgundy’s charm is his local, over-the-top swagger. He's kind of a big deal in San Diego. But nowhere else.
Seeding ETFs in-kind might be similarly bounded: Useful for locals but never hitting national scale.
I’m rooting for Section 351 to go mainstream because it is investor-friendly, but I have no idea if it will ever become cheap and easy enough.
Here’s what a quick LinkedIn poll revealed.
This could be a leading indicator of a massive shift in how ETFs come to market or nerds nerding.
Anecdotally, people keep asking me about Section 351 conversion. The mechanics of the transaction, the cost, the tax implications, what advisers should do, what could go wrong, and, of course, “Is this a big deal?”
Go big or STFU
While “private” ETFs have been quietly seeded in-kind for a long time, I think Meb Faber’s Cambria Tax Aware ETF (TAX) is unusual for its public pitch in the normally suit-and-tie wealth management industry.
Publicity ups the stakes: Dorks like me write about it. People talk. Some cheer. Some jeer. It could boost AUM or make a bellyflop sting harder.
Whatever happens, we’ll glimpse the future when TAX launches on Weds, Dec 18, 2024.
I’ll be looking at portfolio composition and AUM. Expect a short recap later this week.
The ETF in-kind tracker
TAX could begin the in-kind era, where all ETF sponsors set aside resources to fund the sales, marketing, operations, and legal costs of offering a Section 351 conversion to potential investors.
I’ve started tracking new ETFs coming to market with an in-kind option.
Michael Thrasher at Modus pointed out the Tema funds, Meb has another in the works, and Matt Zenz’s EBI are all post-effective (i.e. they have completed SEC registration).
Did I miss any funds seeding in-kind? Message me the details.
If the pipeline of ETFs grows meaningfully, we’ll have a positive indication the in-kind era has begun.