Exchange Funds – Dollar Mentor The above is the summary of a small-group discussion on 351 ETFs. Our non-profit for investment education has a monthly group discussion on various investment/finance topics, and 351 ETFs was discussed last March.
Michael, for your comment "I see the benefit if one has an overly large holding that they want to diversify out of.", there are requirements about the contribution to be "diversified" itself. Specifically, no single stock > 25% of the total contribution and the top 5 must be < 50% of the total contribution. Therefore, it wouldn't be possible to get rid of one or more "overly large holding".I approached the 351 exchange ETF topic with my usual skepticism when I first heard about it, -just like I do it for any new financial products that comes with a sales pitch). I suppose the only investors benefiting from such funds are the ones who have somehow ended up with a handful of stocks that they no longer want to keep (because of undiversified risk, lack of benchmarking, etc.) but are unwilling to sell because of the accumulated tax. Switching to an exchange fund will simply "reduce the risk" for them by diversification without an immediate tax hit. Now, whether the target ETF is something they'd have owned in the first place (even outside the context of 351 exchange) is the key question. If not, perhaps selling the individual stocks and diversifying into ultra low-cost diversified Index fund would be the better long-term solution.
I wrote this piece back in 2022. Since then, I've been regularly traveling to India every few months to spend time with my mother who lives there, and the price of most things I wrote about have gone up - some significantly and some moderate. Strangely, that hasn't changed my spending in USD. That's because US Dollar has been steadily rising against Indian Rupees for the last few years. Between now and then (when I wrote this piece), USD has gained about 16%, shielding my purchasing power there. It's funny how things play out in the financial world. Here's a recent addition to the original article: Five thousand dollars was the price-tag for a family vacation with my wife and daughter in the state of Rajasthan for 12 nights in peak season. It was arranged by a regional tour operator and covered a fulltime private SUV with driver, premium hotels in 6 cities, safari and other recreational experiences, guide, entry-fees and many extras. This tour has been on my wife's bucket-list for many years, and I'm glad that our priceless experience was so affordable.
Comments
Exchange Funds – Dollar Mentor The above is the summary of a small-group discussion on 351 ETFs. Our non-profit for investment education has a monthly group discussion on various investment/finance topics, and 351 ETFs was discussed last March.
Post: 351 Exchange – Tax-Free Transfer of Individual Stocks to an ETF
Link to comment from May 23, 2026
Michael, for your comment "I see the benefit if one has an overly large holding that they want to diversify out of.", there are requirements about the contribution to be "diversified" itself. Specifically, no single stock > 25% of the total contribution and the top 5 must be < 50% of the total contribution. Therefore, it wouldn't be possible to get rid of one or more "overly large holding". I approached the 351 exchange ETF topic with my usual skepticism when I first heard about it, -just like I do it for any new financial products that comes with a sales pitch). I suppose the only investors benefiting from such funds are the ones who have somehow ended up with a handful of stocks that they no longer want to keep (because of undiversified risk, lack of benchmarking, etc.) but are unwilling to sell because of the accumulated tax. Switching to an exchange fund will simply "reduce the risk" for them by diversification without an immediate tax hit. Now, whether the target ETF is something they'd have owned in the first place (even outside the context of 351 exchange) is the key question. If not, perhaps selling the individual stocks and diversifying into ultra low-cost diversified Index fund would be the better long-term solution.
Post: 351 Exchange – Tax-Free Transfer of Individual Stocks to an ETF
Link to comment from May 23, 2026
I wrote this piece back in 2022. Since then, I've been regularly traveling to India every few months to spend time with my mother who lives there, and the price of most things I wrote about have gone up - some significantly and some moderate. Strangely, that hasn't changed my spending in USD. That's because US Dollar has been steadily rising against Indian Rupees for the last few years. Between now and then (when I wrote this piece), USD has gained about 16%, shielding my purchasing power there. It's funny how things play out in the financial world. Here's a recent addition to the original article: Five thousand dollars was the price-tag for a family vacation with my wife and daughter in the state of Rajasthan for 12 nights in peak season. It was arranged by a regional tour operator and covered a fulltime private SUV with driver, premium hotels in 6 cities, safari and other recreational experiences, guide, entry-fees and many extras. This tour has been on my wife's bucket-list for many years, and I'm glad that our priceless experience was so affordable.
Post: Relative Affluence
Link to comment from May 20, 2026