August 8, 2025 • 13 mins
In this episode of Lead-Lag Live, I sit down with Bruce Levine, COO and Head of ETFs at Astoria Portfolio Advisors, to talk about one of the biggest problems facing investors today — how to diversify out of concentrated stock positions without triggering massive tax bills.
We dig into the upcoming launch of the LCOR ETF, built around the innovative 351 exchange structure, and how it can help investors turn overexposed gains into a diversified, actively managed portfolio.
In this episode:
- Why “yesterday’s winners” rarely lead the next decade
- How the 351 exchange works — and who can benefitThe tax advantage that only comes once: October 1 launch date
- Why diversification matters, even for the biggest tech winners
- How LCOR aims to beat the S&P 500 with a large-cap core strategy
Lead-Lag Live brings you inside conversations with top financial minds shaping markets in real time.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Right now we're set up with Schwab and Fidelity and
Pershing as our custodians, soif you have an account with one
of those, that's useful.
It's about a $500,000 minimumbasket size to participate and
pretty much people's taxablemoney or trusts are good
(00:20):
structures for participating.
Speaker 2 (00:37):
Hi everyone and welcome back to Lead Leg Live.
I'm Melanie Schaefer, your hostof the show, and today I'm
joined by Bruce Levine, chiefOperating Officer and Head of
ETFs at Astoria PortfolioAdvisors.
Bruce, it's great to have youhere.
Speaker 1 (00:48):
Great to be here, melanie, thank you.
Speaker 2 (00:49):
So let's start with a problem a lot of investors are
facing.
They've built up largemulti-year gains in individual
stocks, but they're kind ofstuck.
They want to take profits butdon't want to trigger a big tax
bill.
Why is that such a common, youknow sort of trap?
What options do?
Speaker 1 (01:06):
you think they have.
Yeah, it's been a reallyinteresting problem lately.
You know you've had back toback 25% kind of years and in
some of the tech stocks thegains have just been
astronomical, you know two to500% kind of gains over a decade
, let's say.
And so investors are sometimesgetting a little queasy with the
(01:28):
valuations, with theconcentrations, but when it
comes to dealing with it, youknow, other than paying the tax
man, which nobody likes to doyour options are a little bit
limited.
And you know that's what wewere experiencing with our own
clients at the start of the yearand we were looking at all
kinds of different strategiesoption hedging and things like
that.
And then we heard about the 351fund and this is a really
(01:54):
interesting product, that aninteresting structure that
solves this problem, you know,and in a way that no other tax
management strategy does so.
So we file for a prospectus todo a fund and we're out
educating about the benefits ofa 351 to people.
Speaker 2 (02:12):
Yeah.
So I mean, we've seen this sortof play out before high flying
stocks that eventually crash.
Some examples might be likeKodak, GE, et cetera.
Why do you, why do some of theinvestors ignore diversification
in the first place, even whenhistory seems to continue to
warn otherwise?
Speaker 1 (02:28):
Yeah, I mean there's a lot of you know things about
investing that are emotional andyou know when you have big
winners, parting with them forsome people can be emotional,
but but, as you just said,history bears out that when you
have the chance to diversify,you should.
It's very, very rare.
When you look at theleaderboard decade over decade,
company wise, you know it's veryrare that yesterday's winners
(02:52):
are tomorrow's winners.
There are some exceptions, butyou know there's plenty of
Cisco's and Lucent's and IBM'sand others.
Speaker 2 (03:01):
You know, to make the point, yeah, and so, going back
to what you just said a minuteago, that you know the 351 fund
offers a way to diversifywithout incurring taxes, Can you
explain sort of very simply howthis structure works?
Speaker 1 (03:13):
Yeah, it's similar.
A lot of people are familiarwith a 1031 in real estate where
you transfer one asset foranother and you don't have a
change in your cost basis.
In a 351, and 351 is a sectionof the tax code around corporate
formation you transfer a basketof securities for a different
basket of securities and thebasket you transfer in and when
(03:36):
I say you, it's each householdassembles their own basket.
Each end client and everyonewill have a different looking
basket and if you meet thediversification guidelines
required for running a 40-actfund, then you can get the ETF
shares in return.
(03:57):
The two main rules no singlestock can be more than 25% of
the portfolio and the top fivenames can't be more than 50% and
50%.
So if you imagine you have Idon't know three names that are
making up 40% of your portfolio,you could give us those three
(04:19):
names and another 60% of otherstuff and you'd get back a
diversified portfolio where yourtop weighting will be, you know
, seven or 8%, so and it'll be amuch more diversified basket.
Ultimately, this fund run haslike 100 stocks, be, you know,
7% or 8%, and it will be a muchmore diversified basket.
Ultimately, this fund run haslike 100 stocks and you know a
lot of people have much moreconcentrated positions than that
.
Speaker 2 (04:39):
And the launch is October 1st, right Q3?
.
Speaker 1 (04:42):
Yeah, October 1st.
Our fund is a large cap funddesigned to be part of your core
, so the ticker is LCOR.
We call it L-Core because it'sthe large core and it's a
quantitatively managed activemanagement designed to
outperform the S&P 500.
It's based on a strategy that'sbeen run as a separate account
(05:06):
for over 12 years with very goodresults.
It's been run by a guy namedPankaj Patel, a very sharp guy
who's on our investmentcommittee, so we're excited to
bring it in an ETF form.
Speaker 2 (05:16):
So the tax benefits are they?
Can people take advantage ofthat at any time, or is the
launch?
Yeah, great question.
Speaker 1 (05:23):
So it's really just at launch that you can access
the tax benefits.
It's a one-time thing and againthe tax code goes back to
(05:48):
corporate formation.
Then, the day before we launch,the individual holdings are
going to go away and they'regoing to be replaced with shares
of Elcor, and so on day two,this is going to look like any
other ETF in the market.
As a matter of fact, there havebeen a few of these launched
and you wouldn't know.
You couldn't identify a 351 inhindsight from anything going on
(06:10):
in the secondary market.
So it's pretty interesting.
Speaker 2 (06:12):
Yeah, that's really interesting and so can anyone
participate, or are there rulesthat investors need?
Speaker 1 (06:18):
So right now we're set up with Schwab and Fidelity
and Pershing as our custodians.
So if you have an account withone of those, that's useful.
Schwab, like if you're a retailinvestor, you probably need to
come through Astoria and set upan agreement with us prior and
then, of course, we can usethose same custodians.
(06:38):
It's about a $500,000 minimumbasket size to participate and
pretty much people's taxablemoney or trusts are good
structures for participating.
We're not typically allowed totake corporate assets.
Speaker 2 (06:58):
Okay, and so does every investor who contributes,
offer or come with a sort of aunique portfolio follow into the
ETF.
I mean it could end BDA,berkshire, jp Morgan, whatever
they're concentrated in.
Speaker 1 (07:11):
Yeah, everyone comes in with whatever it is that they
want in kind.
Now, ours is a large cap fund,so it's got to be large cap
stocks or large cap ETFs.
Etfs are great because theycome sort of pre-diversified so
they really help in terms ofmeeting the diversification
requirements.
So they really help in terms ofmeeting the diversification
requirements.
So, just to give you an example, a good basket to give us would
be Apple for 25% and the sectorfinancials spider for 75%.
(07:38):
Okay, and that's a diversifiedbasket.
If you tried to give us 25%Apple and 75% spider, we have to
look through the spider whichholds 5% or 6% or 7% Apple, and
then we have to look throughthis spider which holds five or
six or seven percent apple andthen we have to make it adjust
your apple lower.
So we look through the etfs,but they're they're good
collateral.
Um, what we can't take aremutual funds, bonds, uh,
(08:02):
international stocks, small capstocks, cryptos.
It's pretty much got to be whatwe wrote down in the prospectus
, which is a large cap product.
Speaker 2 (08:10):
Right, Okay, so the only way that sort of people
would have any maybe cryptoexposure to would be in some of
those like MSFT or somethingwhere yeah, maybe Coinbase or
something as a security, but nodirect crypto holdings?
Yeah, so who are you exactlylooking for to bring into this?
Speaker 1 (08:30):
Yeah, so we're talking to advisors and it's
really their end clients, andthese are people that have just
been holding securities for along time and if your advisor's
done well for you and you'vebeen invested in a lot of these
stocks for a long time, you tendto have pretty big positions.
But they do get a little bitstuck, they get a little
(08:50):
uncomfortable.
Some of them are, to someextent, yesterday's winners Not
all of them, obviously, but anexample would be people have a
lot of Coca-Cola, they have alot of Johnson Johnson or
Procter Gamble that they've beenaccumulating for years and
(09:11):
perfectly good companies.
But maybe you're interested inthe AI revolution, right, and so
you want to get out of what I'dcall legacy positions and get
into a portfolio that's alwayslooking at what's available
today.
And then, of course, people arejust on a percentage of their
portfolio can be very overweighttech stocks.
(09:31):
If you just bought, you knowApple and Amazon and Nvidia and
a few others Palantir, you knowyou might find a portfolio
that's 60 plus percent.
You know value in tech stocksthat are really high multiples
and you know you might, justfrom a prudence standpoint, want
to change your asset allocation.
Speaker 2 (09:55):
Right.
So moving those equities intoan ETF like this sort of gives
someone more of an opportunityto place their money maybe where
the economy is going.
Speaker 1 (10:02):
Yeah, I think so.
You know, in many cases we'regoing to own many of those same
names.
Right, we're going to ownNVIDIA and Microsoft, just not
to the great extent that they'reowned, you know, in
concentrated portfolios.
Speaker 2 (10:13):
Right.
So, Bruce, just before we go,where can people go to learn
more about Elcor and connectwith your team?
Speaker 1 (10:26):
Yeah, if you come to storyadvisorscom, there's a way
to navigate.
We have a landing page aroundthis W51 that's got some
information on it.
You can certainly reach out tome at, you know, blevine, at
AstoriaAdvisorscom, and yeah,we'd love to talk to you about
this.
It's a really interestingexperience to talk with people
because the education level isrelatively low in aggregate, but
people are starting to get windof it and when they do, they go
(10:47):
, wow, my client has that issue.
I can really see using this.
So that's what we'reexperiencing right now.
Speaker 2 (10:52):
Yeah, it sounds like a really interesting time coming
up ahead and not a lot of timeuntil the launch, so people
really need to get on it now.
Yeah, absolutely, well, I mean.
Thanks so much for joining me.
Everyone else be sure to like,share and subscribe for more
(11:16):
episodes of Lead Leg Live.
I'm Melanie Schaefer and I'llsee you next time.
Right now we're set up with Schwab and Fidelity and
Pershing as our custodians, soif you have an account with one
of those, that's useful.
It's about a $500,000 minimumbasket size to participate and
pretty much people's taxablemoney or trusts are good
(00:20):
structures for participating.
Speaker 2 (00:37):
Hi everyone and welcome back to Lead Leg Live.
I'm Melanie Schaefer, your hostof the show, and today I'm
joined by Bruce Levine, chiefOperating Officer and Head of
ETFs at Astoria PortfolioAdvisors.
Bruce, it's great to have youhere.
Speaker 1 (00:48):
Great to be here, melanie, thank you.
Speaker 2 (00:49):
So let's start with a problem a lot of investors are
facing.
They've built up largemulti-year gains in individual
stocks, but they're kind ofstuck.
They want to take profits butdon't want to trigger a big tax
bill.
Why is that such a common, youknow sort of trap?
What options do?
Speaker 1 (01:06):
you think they have.
Yeah, it's been a reallyinteresting problem lately.
You know you've had back toback 25% kind of years and in
some of the tech stocks thegains have just been
astronomical, you know two to500% kind of gains over a decade
, let's say.
And so investors are sometimesgetting a little queasy with the
(01:28):
valuations, with theconcentrations, but when it
comes to dealing with it, youknow, other than paying the tax
man, which nobody likes to doyour options are a little bit
limited.
And you know that's what wewere experiencing with our own
clients at the start of the yearand we were looking at all
kinds of different strategiesoption hedging and things like
that.
And then we heard about the 351fund and this is a really
(01:54):
interesting product, that aninteresting structure that
solves this problem, you know,and in a way that no other tax
management strategy does so.
So we file for a prospectus todo a fund and we're out
educating about the benefits ofa 351 to people.
Speaker 2 (02:12):
Yeah.
So I mean, we've seen this sortof play out before high flying
stocks that eventually crash.
Some examples might be likeKodak, GE, et cetera.
Why do you, why do some of theinvestors ignore diversification
in the first place, even whenhistory seems to continue to
warn otherwise?
Speaker 1 (02:28):
Yeah, I mean there's a lot of you know things about
investing that are emotional andyou know when you have big
winners, parting with them forsome people can be emotional,
but but, as you just said,history bears out that when you
have the chance to diversify,you should.
It's very, very rare.
When you look at theleaderboard decade over decade,
company wise, you know it's veryrare that yesterday's winners
(02:52):
are tomorrow's winners.
There are some exceptions, butyou know there's plenty of
Cisco's and Lucent's and IBM'sand others.
Speaker 2 (03:01):
You know, to make the point, yeah, and so, going back
to what you just said a minuteago, that you know the 351 fund
offers a way to diversifywithout incurring taxes, Can you
explain sort of very simply howthis structure works?
Speaker 1 (03:13):
Yeah, it's similar.
A lot of people are familiarwith a 1031 in real estate where
you transfer one asset foranother and you don't have a
change in your cost basis.
In a 351, and 351 is a sectionof the tax code around corporate
formation you transfer a basketof securities for a different
basket of securities and thebasket you transfer in and when
(03:36):
I say you, it's each householdassembles their own basket.
Each end client and everyonewill have a different looking
basket and if you meet thediversification guidelines
required for running a 40-actfund, then you can get the ETF
shares in return.
(03:57):
The two main rules no singlestock can be more than 25% of
the portfolio and the top fivenames can't be more than 50% and
50%.
So if you imagine you have Idon't know three names that are
making up 40% of your portfolio,you could give us those three
(04:19):
names and another 60% of otherstuff and you'd get back a
diversified portfolio where yourtop weighting will be, you know
, seven or 8%, so and it'll be amuch more diversified basket.
Ultimately, this fund run haslike 100 stocks, be, you know,
7% or 8%, and it will be a muchmore diversified basket.
Ultimately, this fund run haslike 100 stocks and you know a
lot of people have much moreconcentrated positions than that
.
Speaker 2 (04:39):
And the launch is October 1st, right Q3?
.
Speaker 1 (04:42):
Yeah, October 1st.
Our fund is a large cap funddesigned to be part of your core
, so the ticker is LCOR.
We call it L-Core because it'sthe large core and it's a
quantitatively managed activemanagement designed to
outperform the S&P 500.
It's based on a strategy that'sbeen run as a separate account
(05:06):
for over 12 years with very goodresults.
It's been run by a guy namedPankaj Patel, a very sharp guy
who's on our investmentcommittee, so we're excited to
bring it in an ETF form.
Speaker 2 (05:16):
So the tax benefits are they?
Can people take advantage ofthat at any time, or is the
launch?
Yeah, great question.
Speaker 1 (05:23):
So it's really just at launch that you can access
the tax benefits.
It's a one-time thing and againthe tax code goes back to
(05:48):
corporate formation.
Then, the day before we launch,the individual holdings are
going to go away and they'regoing to be replaced with shares
of Elcor, and so on day two,this is going to look like any
other ETF in the market.
As a matter of fact, there havebeen a few of these launched
and you wouldn't know.
You couldn't identify a 351 inhindsight from anything going on
(06:10):
in the secondary market.
So it's pretty interesting.
Speaker 2 (06:12):
Yeah, that's really interesting and so can anyone
participate, or are there rulesthat investors need?
Speaker 1 (06:18):
So right now we're set up with Schwab and Fidelity
and Pershing as our custodians.
So if you have an account withone of those, that's useful.
Schwab, like if you're a retailinvestor, you probably need to
come through Astoria and set upan agreement with us prior and
then, of course, we can usethose same custodians.
(06:38):
It's about a $500,000 minimumbasket size to participate and
pretty much people's taxablemoney or trusts are good
structures for participating.
We're not typically allowed totake corporate assets.
Speaker 2 (06:58):
Okay, and so does every investor who contributes,
offer or come with a sort of aunique portfolio follow into the
ETF.
I mean it could end BDA,berkshire, jp Morgan, whatever
they're concentrated in.
Speaker 1 (07:11):
Yeah, everyone comes in with whatever it is that they
want in kind.
Now, ours is a large cap fund,so it's got to be large cap
stocks or large cap ETFs.
Etfs are great because theycome sort of pre-diversified so
they really help in terms ofmeeting the diversification
requirements.
So they really help in terms ofmeeting the diversification
requirements.
So, just to give you an example, a good basket to give us would
be Apple for 25% and the sectorfinancials spider for 75%.
(07:38):
Okay, and that's a diversifiedbasket.
If you tried to give us 25%Apple and 75% spider, we have to
look through the spider whichholds 5% or 6% or 7% Apple, and
then we have to look throughthis spider which holds five or
six or seven percent apple andthen we have to make it adjust
your apple lower.
So we look through the etfs,but they're they're good
collateral.
Um, what we can't take aremutual funds, bonds, uh,
(08:02):
international stocks, small capstocks, cryptos.
It's pretty much got to be whatwe wrote down in the prospectus
, which is a large cap product.
Speaker 2 (08:10):
Right, Okay, so the only way that sort of people
would have any maybe cryptoexposure to would be in some of
those like MSFT or somethingwhere yeah, maybe Coinbase or
something as a security, but nodirect crypto holdings?
Yeah, so who are you exactlylooking for to bring into this?
Speaker 1 (08:30):
Yeah, so we're talking to advisors and it's
really their end clients, andthese are people that have just
been holding securities for along time and if your advisor's
done well for you and you'vebeen invested in a lot of these
stocks for a long time, you tendto have pretty big positions.
But they do get a little bitstuck, they get a little
(08:50):
uncomfortable.
Some of them are, to someextent, yesterday's winners Not
all of them, obviously, but anexample would be people have a
lot of Coca-Cola, they have alot of Johnson Johnson or
Procter Gamble that they've beenaccumulating for years and
(09:11):
perfectly good companies.
But maybe you're interested inthe AI revolution, right, and so
you want to get out of what I'dcall legacy positions and get
into a portfolio that's alwayslooking at what's available
today.
And then, of course, people arejust on a percentage of their
portfolio can be very overweighttech stocks.
(09:31):
If you just bought, you knowApple and Amazon and Nvidia and
a few others Palantir, you knowyou might find a portfolio
that's 60 plus percent.
You know value in tech stocksthat are really high multiples
and you know you might, justfrom a prudence standpoint, want
to change your asset allocation.
Speaker 2 (09:55):
Right.
So moving those equities intoan ETF like this sort of gives
someone more of an opportunityto place their money maybe where
the economy is going.
Speaker 1 (10:02):
Yeah, I think so.
You know, in many cases we'regoing to own many of those same
names.
Right, we're going to ownNVIDIA and Microsoft, just not
to the great extent that they'reowned, you know, in
concentrated portfolios.
Speaker 2 (10:13):
Right.
So, Bruce, just before we go,where can people go to learn
more about Elcor and connectwith your team?
Speaker 1 (10:26):
Yeah, if you come to storyadvisorscom, there's a way
to navigate.
We have a landing page aroundthis W51 that's got some
information on it.
You can certainly reach out tome at, you know, blevine, at
AstoriaAdvisorscom, and yeah,we'd love to talk to you about
this.
It's a really interestingexperience to talk with people
because the education level isrelatively low in aggregate, but
people are starting to get windof it and when they do, they go
(10:47):
, wow, my client has that issue.
I can really see using this.
So that's what we'reexperiencing right now.
Speaker 2 (10:52):
Yeah, it sounds like a really interesting time coming
up ahead and not a lot of timeuntil the launch, so people
really need to get on it now.
Yeah, absolutely, well, I mean.
Thanks so much for joining me.
Everyone else be sure to like,share and subscribe for more
(11:16):
episodes of Lead Leg Live.
I'm Melanie Schaefer and I'llsee you next time.
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