October 22, 2025 • 29 mins
Tired of choosing between concentration risk and a painful tax bill? Michael sits down with Med Faber from Cambria Investment Management. We break down a smarter option: using a 351 ETF exchange to convert appreciated, concentrated stock positions into a diversified ETF without triggering taxes. Think of it like a 1031 for public equities—contribute eligible positions at launch, receive ETF shares in return, and let the portfolio rebalance inside the tax-efficient ETF wrapper.
We walk through:
The exact rules that matter
Why your largest position must be under 25% and your top five under 50%
Which assets qualify, and why contributions must happen at the seed stage.
You’ll hear real examples of prior 351 launches, learn about the upcoming U.S. equal weight fund aimed at breaking the market-cap link, and get a clear timeline: indicate interest, submit holdings, pause trading, transfer positions, and receive ETF shares on day one. We also explain the powerful benefit of multiple cost-basis lots embedded in the ETF, which can make future tax management far more flexible.
Along the way, we widen the lens to the current market: elevated U.S. valuations, heavy index concentration in the same handful of megacaps, and a stealth rotation in gold and non-U.S. value strategies. If you’ve been meaning to diversify but taxes keep you stuck, this is the actionable path. Advisors will find a field guide for client conversations—simple analogies that land, common custodian workflows, and prospecting angles for executives, VC distributions, and direct indexing portfolios.
#LeadLagLive #Cambria #USEW #IncomeInvesting #Markets #Investing
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:11):
Uh for those that are here for the CE credits, um
just bear with me to the end ofthe presentation.
I will email you afterwards, getyour CE credit info.
Submit this CFP board.
Um, so just uh hold on.
Uh don't just leave right away.
Uh if you happen to be in anoffice and you're a financial
advisor and with other financialadvisors, please let them know
that this webinar is takingplace.
I promise you you will enjoy itbecause MEP Favor is one of the
(00:32):
OGs in the industry who I'veknown for well over a decade,
who's built a hell of a companywith Cambria, a number of funds,
and we talked about uh some ofthose as well as 351 exchanges,
which MEB believes are going tobe the next hot thing in all of
2026.
So you'll get a good insight onthat process.
Um, and with all that, all thatsaid, my name is Michael Gayed.
Uh, this webinar is sponsored byCambria, one of my clients.
(00:54):
I will introduce my friend, Mr.
Mepp Favor, and uh you will allbe wowed, I promise you.
SPEAKER_00 (00:58):
What's up, everybody?
Uh happy Wednesday.
I should be wearing my Dodgershat, but it's Dodgers Blue.
So um I'm a reform Rockies fan.
So if anyone's uh cheering forbaseball, you know, uh I'm uh
I'm I'm I'm Rockies arebasically a double-A team at
this point.
So anyway, um I got a littledeck that we can run through
(01:20):
that'll be fun.
Um if uh as everyone kind ofjoins in here.
Um what are we talking abouttoday?
This is a topic that probably99% of advisors, investors, VCs,
CEOs have not heard of.
And this is the topic of 351 ETFconversions.
And we'll talk about a fewthings as we go along here, of
(01:41):
course.
But um, you know, for those whodon't know us, my day job is
running Cambria ETFs, where uhyou can find a bunch of
information on our 19 Soon2be20funds at CambriaFunds.com.
We uh we have a little over 3billion and 100,000 investors.
We have a really nice freeresearch website called the Idea
(02:02):
Farm that's getting redesigned.
Should be out this week.
Pretty excited.
It should be your institutionalresearch homepage.
Sends out an email once a week,also to over 100,000 people.
Uh, we've been publishing blogsand research, white papers,
books for a long time over atMeb Favor, and then more
recently on the podcast, 600episodes now, which I can't
(02:23):
believe.
Uh guy had an alum as well.
But as we talk about what'sgoing on in the world, we'll do
just a quick uh update.
Everybody's fat and happy.
There's two kinds of topics thateveryone's talking about right
now.
That's stocks at all-time highsand gold.
You know, nobody was talkingabout gold when it was 3,000.
Now everybody's talking about itat 4,000.
(02:43):
There were signs.
This is a chart of the U.S.
valuation, you know, and we'reback up to, I don't know if you
can quite see it because this isupdated in June, but we're we've
now exceeded that little peak in21.
So the final boss is left on aPE ratio basis.
This is the most expensivemarket since late 90s.
A little different.
You know, the companies havebeen growing, they have some
(03:05):
cash, but still uh they'reexpensive.
I learned yesterday that the topuh nine stocks in SP and NASDAQ
are all the same names.
I feel like that would surprisepeople.
It would be the top 10, butBerkshire is not in the Nasdaq.
So um so you everyone knows yougot this con you got this
valuation problem, you got thisconcentration problem.
(03:27):
I feel like these are well-knowntopics, but everyone that you
talk to is say, look, I boughtNVIDIA, I got the Mag 7, I got
Apple, I got Berkshire, I meanall these stocks, the US stocks
in general, SPY, and they say,Well, I can't sell them.
I know they're expensive, I wantto sell them, but tax man's
gonna kill me.
And so you have these twooptions if you got concentrated
(03:49):
stock holdings.
You just hold it and just suckit up.
Say, look, I'm just gonna dealwith this over time.
I can sit through drawdowns, oryou gotta sell it, pay those
capital gains taxes.
You know, no one likes to uh payto the government what um or the
the tax man, right?
Like that's no one volunteers topay more than they owe.
(04:10):
So you sell, trigger capitalgains, and move on.
But what if there was a thirdway?
It's almost sounds like aeight-minute abs sort of
conversation, but you know, wewe think we we have found a good
solution to this and otherproblems that are similar.
So let's think about it.
How are we gonna do this?
Um, well, the answer we think is351 ETF exchange.
(04:31):
And for those who aren'tfamiliar with that acronym, it's
sort of like a 1031 real estate,but for stocks.
So it's contribution that allowsfor the transfer of assets such
as stocks or ETFs, but reallyit's public assets, stocks or
ETFs, uh, to an ETF withoutrealizing a taxable event.
Now, it's not washing thosetaxes, that would be illegal, of
(04:51):
course, but basically you'recontributing property to an ETF,
getting the ETF in return.
Um, and so why is thatinteresting?
Well, you could move from a veryconcentrated portfolio to a
diversified portfolio.
Uh, and then if you knowanything about ETFs, the ETF can
then rebalance and staydiversified uh for the
foreseeable future.
Most ETFs really never pay acapital gains uh uh
(05:13):
distribution.
So, um, what are the main rules?
Where are we here?
Why isn't this moving over?
There we go.
There's two big rules.
First of all, you can't justgive me 10 million NVIDIA.
Uh the biggest position can't beabove 25%.
And then second, the top fivepositions can't be above 50.
So realistically, what does thatmean?
Well, you need about a dozenstocks or ETFs or pass through.
(05:38):
So spy, for example, is apass-through security where it
looks at the underlyingholdings.
So theoretically, you couldactually contribute 100% SPY.
What do people do in reality?
Well, they tend to submit alittle bit of both.
So they may have a handful ofconcentrated stocks that they
would like to move on from andthen uh round it out with some
ETFs as well.
(05:58):
This is only on the seed, so youcan't do this um after an ETF
launches.
Once an ETF launches, it's justlike every other ETF.
Uh so if you want the 351benefit, you gotta do it at the
beginning.
So again, like a lot of peopleask us these questions, and
they're they're typical ofthings that qualify and don't
(06:20):
qualify.
You know, we just mentioned youcan contribute stock, you know,
and in various uh numbers,anything above really a dozen is
is usually good to go.
You could do things like ETFs,things that don't qualify,
anything private, options,futures.
Uh you can't do 50% NVIDIA and50% cash, you can't do mutual
(06:43):
funds, can't do Dogecoin, allthese things.
Although, by the way, I thinkyou will be able to do next year
contributions into uh 351 fromvarious crypto positions if the
underlying strategy, the ETF, uhhas crypto as a part of the
overall portfolio.
So for uh um, I'm gonna skipover the next fund we're doing
(07:04):
and I'm gonna jump real quick tothe funds we've done.
So we've done three of thesealready.
First one was almost a year ago,uh, and uh kind of announcing it
to the world.
And as you can see, as they'vebeen getting bigger and bigger,
tax was 30 million-ish uh onlaunch, which was a U.S.
stock fund avoiding dividends,targeting companies with low
payouts.
(07:25):
Endw was a uh diversifiedallocation fund using a little
bit of leverage that launchedwith over 100 million.
I think it's over 125 now.
And then GEW launched a coupleweeks ago, uh, and that one was
150 million.
So they're getting bigger andbigger.
That was a global stock fund.
So what's the next one?
Well, we got USEW as the ticker,and that's going to focus on
(07:50):
U.S.
stocks.
So looking at U.S.
stocks as a percentage of thewhole, uh, you know, you know
this concentration issue.
So we're really trying to breakthat market cap link.
Market cap to us is a dangerousplace to be currently.
Historically, market cap hasunderperformed equal weight over
long periods.
Although over other periods,like the last 15 years, market
(08:10):
cap stomps everything else.
Um, and if you look at the equalweight uh, you know, type of
idea, we can accept any type ofU.S.
stocks to be the biggest and themost liquid.
But more importantly, this is uhthis is a fund that's coming in
at a very low expense ratio ofonly 25 basis points.
Uh pretty, pretty screamingcheap.
(08:30):
This launches December 17th.
So what do you got to do beforethen if you're interested?
Everybody's quiet.
No, no, no chat, no questionsyet.
So you guys throw these in ifyou got any um if you got any
questions.
Um what are the dates here?
The dates are you gotta let usknow now.
There's two options.
Uh you got to go through afinancial advisor.
(08:51):
So um you you let us know, hey,I got some clients, they're
doing direct indexing, they gotconcentrated portfolios, I want
to do a strategic rebalance,whatever it may be.
Uh, I want to indicate myinterest.
So we'll help you, we'll giveyou white glove service, walk
you through, kind of help goabout uh contributing here.
And you got to have theseportfolios in by the week before
(09:11):
Thanksgiving.
So November 19th.
You got about a month and ahalf, plenty of time.
And uh and all the paperworkbuttoned down by essentially
Thanksgiving.
And then this will launchmid-December.
If you're an individual, uh ifyou're a family office or
something, we we have um theability to work with various
RIAs or people that can uploadthese, that can walk you through
(09:32):
the process.
Reach out to us.
Certainly we can help you.
This email is golden351 atCambriaFunds.com.
You can also go to the website,it's got a ton of information uh
at CambriaFunds.com about ourETFs currently, but also the
351, a lot of PDFs, a lot ofpodcasts that'll go into uh a
lot deeper discussion on uh whatwe talked about today.
(09:54):
I'm giving you guys a very quickoverview because everyone's so
quiet.
No chat, no questions yet.
Um so we're kind of just uhcruising through.
Um oh, chat's disabled.
Well, just kidding.
Throw it into the uh QA then.
Sorry, you guys.
If you got questions, put it inthe QA, not the chat.
Uh QA.
Thank you, uh Kimberly.
(10:14):
Um so if anybody's gotquestions, QA.
So as of now, um I'm gonna uhI'm gonna kind of start to wind
down a little bit on this very,very quick overview.
Uh hopefully I didn't skip overtoo much because we've done this
so many times, talked about it,that uh it's second nature to
us.
Um one traditional question forpeople is often, hey, look, Meb,
(10:37):
I'm busy.
It's year end.
Will you be doing any any moreof these in 2026?
I expect this one to be ourbiggest yet, so likely in the
hundreds of millions of dollars.
I don't think it'll be over abillion, but it could be.
But uh but we plan to lay out abuffet of a few more choices in
2026, uh, with onboarding maybeat the end of Q1, into Q3, Q4,
(11:00):
uh various strategies.
I imagine a US stock, a globalstock, and an allocation will
probably be the traditional uhbuffet for for next year as
well.
Um you can come see us in LosAngeles.
We're located here in ManhattanBeach.
And um again, here's the websiteand information on the email to
be able to reach out if you guyswant to talk.
(11:22):
I don't see anything in the QA.
Oh, we got something.
What securities can we take?
You know, a lot of people whohave experience with traditional
exchange funds uh have had asour experience because let's
say you got 10 million NVIDIAand you reach out to Goldman or
Eden Vance and they're probablycharging you an arm and a leg
anyway.
But uh traditionally the problemwith exchange fund is A, you got
(11:44):
to hold it for seven years, B,it's expensive.
C, if you got NVIDIA, theyprobably aren't gonna take it
because they say that's allanybody's got is NVIDIA.
And so um, you know, they theyfor at least for us, if it's
some tiny microcap mining stock,you know, from Vancouver, we
probably won't take it.
The basic rules are is it liquidand tradable?
(12:06):
And then does it match the thestrategy?
So the next fund in December isU.S.
stocks, so we won't be takingany foreign stocks, we won't be
taking any real estate orcommodities or anything like
that.
It's just a stock fund.
Uh, but with that onunderstanding, almost all stocks
uh qualify.
It just can't be tiny and itcan't be something that's um not
(12:27):
liquid or tradable.
SPEAKER_01 (12:29):
Okay, can we get a little bit into the mechanics,
like in terms of now that you'vedone a few of these, how long is
the process for an advisor?
How involved is the end client?
Like, what does that look likelogistically?
SPEAKER_00 (12:39):
Yeah, I mean it's it's pretty smooth.
You know, traditionally for umfor the clients, certain
custodians are much easier.
Someone like a Schwab is uh istotally on board.
They love it.
Others like Fidelity, it's it'snot like a universal experience.
You know, you tend to have to gothrough your um local uh um
(13:05):
administrator, product managerversus Schwab, which is just
like a rubber stamp sort ofsituation.
But even then, it's prettysmooth.
We work with our partners, ETFArchitect, Wes Gray, and Pat
Cleary on this.
And so they got that militaryefficiency.
They've done a bunch of these,and we've done three.
So basically, you have to submitan Excel sheet that's got the
(13:25):
client positions.
And so, hey, look, here's thetax lots, here's the cost basis,
here's, you know, basically amonthly report from Schwab.
And uh we make sure that itqualifies.
And assuming it does, uh, thenyou need to sign, you know, one
form client, hey, I know thatthis is happening, this is going
on, I get it.
And basically we say stoptrading.
(13:46):
So end of November, we would belike, stop trading this account.
Uh, you know, you can't havemargin or shorts or leverage on
it.
And basically, you know, acouple days before those
positions will transfer to USbank, and then the day of the
launch, you'll get the ETF back.
Now, the cool part is let's sayyou submit 20 positions, you're
(14:06):
gonna get the 20 positions withan original cost basis for the
ETF.
And so you can kind of pick andchoose what cost basis you want
to uh trade in the future.
So there's no holding period.
You could theoretically sell itday one.
Now you're not gonna want to ifyou contributed NVIDIA at a
dollar because you're gonna bepaying taxes on that original
cost basis.
But if you contribute NVIDIA andmaybe some SPY that doesn't have
(14:29):
as much of gains on it, the SPYcould be uh liquidated pretty
quickly, and you may not have toum pay significant taxes on
this.
So it's a pretty flexibleapproach.
We have people that havesubmitted direct indexing
long-only portfolios that mayhave 100 or 500 positions, and
then they now have all these taxslots on the ETF that they can
(14:49):
manage going forward.
And so there's some people alsothat say, hey, look, you know,
there's like four main usecases.
The first is concentrated stock,the second is strategic
rebalancing.
So if you're stuck in all USstocks, for example, market cap
weight, and you're like, I justgot to get out of this SPY or
the Qs.
And then third would besomething like a direct
indexing.
Fourth, though, if you're afinancial advisor, is is
(15:11):
business development andprospecting.
I mean, I can't tell you guys, II say this, you guys now know
about it, but zero VCs I'vespoken to.
So despite the fact their entirebusiness model is to invest in
private companies that go publicand distribute these massively
appreciated shares, they usuallythen just sell them.
Well, if you're rich enough,you'll just donate them.
I don't know.
(15:31):
But uh, but again, you could uheasily contribute these and uh
get a diversified portfolio andexchange.
And so it's um there's a lot ofdifferent use cases.
None of the companies, like if Iwas a local financial advisor,
I'd go down to my top fivebiggest public corporations and
say, can I talk to your investorrelations?
I now have a solution for your10,000 uh NVIDIA employees that
(15:52):
have like 20 million dollarsstuck in this stock.
We can be able to assist them ina way that uh will help them to
start to diversify away from uhthis company.
So it I think it's a pretty uminteresting idea that has not
gone mainstream yet.
I think 2026 will probably bethe the year of uh the 351.
SPEAKER_01 (16:13):
You mentioned uh let's talk macro for a few
minutes here.
Um you mentioned everyone's fatand happy.
Um I'm pretty sure fat and happyoften leads to the conditions
under which heart attackshappen.
Uh won't be see is a is a legitcause there.
Um are we ever gonna see riskagain, man?
SPEAKER_00 (16:29):
I mean So Um You know, I I've said a couple
things.
You know, we wrote this paper,which I loved, my favorite paper
of the last few years, which iscalled The Bear Market and
Diversication, just talkingabout how the SP has crushed
everything for the past 15years.
And then over the last year ortwo, you've started to see other
things perk up.
(16:50):
So the one there's the onethat's everyone's talking about
this year, which is gold andrightfully so, and silver, those
things are up, you know, a tonat all-time highs.
But then you have some otherthings, and I said this today
kind of quietly beneath thesurface.
So everyone, I had a tweet whengold hit 3,000, and I was like,
gold's dripping, no one in myworld's talking about it yet.
And so today we were like golddripping, it's at 4,000.
(17:12):
Seemingly everyone's talkingabout it now.
But with U.S.
stocks at all-time highs, um,there's some other things that
are doing great.
Foreign stocks, the value tradeuh, you know, is has been
fantastic X US this year.
So a deep value strategy is up.
Um, you know, we have an ETFGVal, which is up well over 40%
(17:33):
this year.
And I'm gonna tell yousomething.
It's it's October, so it'sHalloween, Guyad.
Um, I'm gonna give you a spookystatistic where uh currently
that fund, and you guys got tolook it up, but certainly this
month over the next few weeks,unless it uh, you know, crashes
or goes down.
I think this is a statistic thatwill surprise everyone
(17:53):
listening.
This G-Val ETF, which buys thecheapest countries in the world,
so often places many peopledon't want to invest, and for
many years was totally stinky.
Uh this strategy buys countrieslike Brazilian stocks and
Colombian stocks and Polishstocks and Turkish stocks, UK
stocks, was in there for quite awhile.
Um this fund is now beating theSP on a one, a three, and a
(18:17):
five-year basis.
And people are like, oh my, thatcan't be true, right?
Like US is creaming everything.
And, you know, the challenge issome things are starting to
really uh, you know, comearound.
So um that having been said,there are other areas that have
not started coming around.
I think the ones that are goingto be most obvious to people
(18:38):
would be uh US mid-cap, U.S.
small cap, U.S.
value, right?
Those are doing okay, but youhaven't seen the reversion the
same way you have X US value.
And in broad foreign developedand emerging are doing great
too.
I think, you know, those are inthe kind of 20, 30% range,
whatever they are, those aredoing uh well.
But but until the US market capweight does something else.
(19:04):
So it could be sideways, itcould be down, down a lot.
I don't think anyone's motivatedto move.
If we know anything aboutinertia, people, you know, they
when they're fat and happy, theydon't want to get off the couch.
So uh, but if if somethingstarts to jiggle or things get a
little weird, you could see somepretty big shifts.
Um we said the other day onTwitter it was a valuation chart
(19:25):
of market cap versus equalweight.
I said, you to me, you have tobe crazy to be YOLOing into
market cap weight.
If you're a strategic assetallocator doing this for like,
you know, the next 10 years.
If you're doing if you're atrader and you're trading,
whatever, that's that's adifferent story.
But if you're an investor, Ithink this point in the cycle,
(19:46):
historically from 40 plus caperatio, we have not found a time
in history where a country stockmarket ended the year.
So we're not there yet, we gotthree, two, three months to go.
But if we end the year above 40,there's been no year in history
we could find where the future10-year real returns are above
average.
So meaning like 5% real returns.
(20:07):
And on average, it's zero realreturns for the next 10 years.
So not the best starting point,but you know, as a trend faller,
I'm I'm happily long everythingjust about, you know, but uh
it's uh on the value side, it'sgetting getting a little scary.
Uh I uh I reposted then liked,as you could tell, this post
(20:28):
from you.
Ah, that was a good one.
SPEAKER_01 (20:29):
AI, what's coming next?
You said bear market.
SPEAKER_00 (20:32):
Yeah.
Well, I've had a lot of fun withAI.
You know, I downloaded Sora.
I've been um poking my favoriteuh nemesis of of CalPers and
other institutional managers.
I I posted a video to LinkedIn.
Um I posted a few commercialsfor our ETFs, but my my
compliance friend said, yougotta take these down, Meb.
Even though they're AI and eventhough you're joking, you can't
(20:53):
even mention it.
So I said, okay, I'll just I'llturn my attention to Calpers.
But I posted a video of mepresenting to the Calpers board,
but the CowPers board wasreplaced with Lego figures, and
uh they all started crying whenI said I was gonna fire everyone
and replace you guys with abunch of ETFs.
Uh so I'm having a lot of funwith AI, but uh it seemingly is
(21:14):
sucking all of the air.
I saw a uh I do a lot of startupprivate investing.
I saw a stat the other day thatsomething like 70% of all the
money and deals are going to AIcompanies, which which jives
with my deal flow that I see.
I see it's all AI companies thatare either have no revenue and
are trading at crazy valuationor have some revenue and are
(21:36):
trading at crazy valuation.
Either way, it's crazy, it'scrazy valuations across the
board.
I guess the question is can youhave a bear market and AI and
bull market and everything else?
Um, you know, it uh it'sinteresting.
Even the stuff that's in likethe NASDAQ cues that's not tech
is getting dragged up.
Like Costco.
(21:56):
I love Costco, but it'ssomething like a 50 PE.
You know, it's like a it's likea nutty time.
Um, but again, you know, itfeels like right, it feels like
musical chairs right now.
It feels like everyone knows.
Like it's not like people arelike, no, stocks aren't
expensive.
I was like, everyone's like,yeah, okay, I I this feels
nutty, but I'm I gotta wait.
(22:18):
Like I'm I'm just I'm gonna bethe first one to jump off the
Titanic.
So I think there's certainly alot of things people could be
doing to diversify away frommarket cap US stocks, but I
don't think anyone is quite yet.
SPEAKER_01 (22:31):
Yeah.
Let's uh let's go back uh againfor those I know those right
here for the C credits, I'llemail you afterwards.
Um go back to the 351s foradvisors that are curious and
want to do it.
How would you advise them to goabout talking about it to their
own clients?
Because it's kind of a concept,right?
There's an education processboth ways, you on the advisor.
Yeah, I know it worth.
SPEAKER_00 (22:50):
The first thing is just go to the Cambria Fund
site.
We got a 351 tab.
There's a bunch of PDFs andpodcasts that are pretty good
material, gives you a broadoverview.
I mean, I think the simplest wayis to describe it as hey, look,
um having a concentratedportfolio, and there's reams of
research on this, is a horribleidea on average.
(23:13):
You'll always get the exceptionswhere you can point to someone
and say, Well, look, but yeah,but they've owned their entire
portfolio, it's been inBerkshire for 30 years.
Their entire portfolio has beenin NVIDIA.
And you're like, well, butthousands of other stocks where
their entire portfolio was in Xand it lost all their money or
underperformed.
So uh it's even harder forindividuals, particularly when
(23:34):
they have a constant traderportfolio that made a lot of
money, because then they havethat hindsight bias where like,
this was my ticket.
You know, I I know, I know thiscompany.
I know Enron is the best placeto be, on and on.
So I think the way once they, ifthe client's on board, say,
okay, yes, I realize I need todiversify.
I'm I'm on board.
I that's sound advice.
(23:54):
I don't want to put all my eggsin this basket.
It's kind of like saying, hey,you know, if they know what a
1031 is, say basically you canswap this building out, sell it,
you get another building, anddefer your taxes.
I think that's the best analogy.
It's not a clean one.
If they've experienced exchangefunds, it's not that too
different.
But basically, it's like, hey,you can swap out this portfolio,
(24:16):
get this other portfolio.
And then 351's been in the taxcode for many decades.
It just found its perfectpartner with the ETF structure.
Uh, and so, you know, you you'veseen a lot of prior art.
There's been over a hundred ofthese now.
Uh, so it's it's kind of thebest way I would describe it is
that you can diversify in atax-deferred manner and do it in
(24:39):
a way that's that's clean with alot of um, you know, when I we
were talking about this a yearand a half ago, it was a little
different because people werelike, Well, you haven't done any
of these, is this real?
Is it legal?
And now, like everyone's doingit.
It's you know, Goldman did onethat was a billion, uh, but
obviously only for one client.
Um, so we're we're we're one ofthe uh I think us and ETF
(25:01):
Architect are really one of thefew that are doing it open
enrollment, being like if you'rea finance advisor, you're an
individual, reach out and uh wecan we can help you out.
SPEAKER_01 (25:10):
Oh, we got one more question.
Why do you want more question?
Hold on.
Uh which we'd like to talk abouthow the Kimberly ETF gets
managed once launched and allthe assets are mixed.
SPEAKER_00 (25:18):
So uh thanks, Kimberly.
Um it depends on what thestrategy is.
So for our next fund, it's aU.S.
stock strategy.
And it depends a little bit onwhat's contributed.
So here's another example.
You can go back and look at ourold ones, so like our endowment
ETF, ENDW.
You know, ENDW is meant to be uhbroadly replicate endowment
(25:41):
style allocation and usesleverage.
So it gets up to 140% leverage.
So if you look at that fund, itowns ETFs, it owns some treasury
futures, but it had a lot ofstocks that were contributed.
There's sort of a glide path,depending on what was
contributed.
You know, we say it could takeup to a year to get to the final
portfolio.
(26:02):
That having been said, we expectmonth one, week one, really,
because of what was contributed,and it's only under the universe
that we're accepting, to reallyalready be at a correlation, a
beta to the final strategy wellover 0.9.
So already month one, you'rekind of you've got the beta of
what the correlation of wherewe're going.
(26:23):
And then over time, we'reextremely conservative on uh,
you know, kind of notantagonizing the regulators.
Others are are not.
They they uh I think fly way tooclose to the sun on some of the
ways they operate, not just uhthis world, but you know, in
general.
And so um it it it will dependon each fund.
(26:44):
So this one in December is USonly stocks, long only.
But if you look for us as in2026, uh we may have a totally
different buffet of ideas, andyou can kind of pick and choose
which one uh you may beinterested in.
SPEAKER_01 (26:58):
That's uh probably a good place to wrap this uh
webinar up, unless uh Web Mip,you've got anything else?
SPEAKER_00 (27:03):
No, you guys please reach out to me.
We have uh, you know, uh a lotof folks here that'll be happily
to set up a call, shoot you anemail, talk about it later.
And uh and if you're in thelocal, you can come say hi.
SPEAKER_01 (27:15):
There you go.
Appreciate everybody that'shere.
You'll get an email from meshortly.
Thank everybody for the uhattention, and we'll see you
next time.
Cheers, everybody.
Good Dodgers.
Uh for those that are here for the CE credits, um
just bear with me to the end ofthe presentation.
I will email you afterwards, getyour CE credit info.
Submit this CFP board.
Um, so just uh hold on.
Uh don't just leave right away.
Uh if you happen to be in anoffice and you're a financial
advisor and with other financialadvisors, please let them know
that this webinar is takingplace.
I promise you you will enjoy itbecause MEP Favor is one of the
(00:32):
OGs in the industry who I'veknown for well over a decade,
who's built a hell of a companywith Cambria, a number of funds,
and we talked about uh some ofthose as well as 351 exchanges,
which MEB believes are going tobe the next hot thing in all of
2026.
So you'll get a good insight onthat process.
Um, and with all that, all thatsaid, my name is Michael Gayed.
Uh, this webinar is sponsored byCambria, one of my clients.
(00:54):
I will introduce my friend, Mr.
Mepp Favor, and uh you will allbe wowed, I promise you.
SPEAKER_00 (00:58):
What's up, everybody?
Uh happy Wednesday.
I should be wearing my Dodgershat, but it's Dodgers Blue.
So um I'm a reform Rockies fan.
So if anyone's uh cheering forbaseball, you know, uh I'm uh
I'm I'm I'm Rockies arebasically a double-A team at
this point.
So anyway, um I got a littledeck that we can run through
(01:20):
that'll be fun.
Um if uh as everyone kind ofjoins in here.
Um what are we talking abouttoday?
This is a topic that probably99% of advisors, investors, VCs,
CEOs have not heard of.
And this is the topic of 351 ETFconversions.
And we'll talk about a fewthings as we go along here, of
(01:41):
course.
But um, you know, for those whodon't know us, my day job is
running Cambria ETFs, where uhyou can find a bunch of
information on our 19 Soon2be20funds at CambriaFunds.com.
We uh we have a little over 3billion and 100,000 investors.
We have a really nice freeresearch website called the Idea
(02:02):
Farm that's getting redesigned.
Should be out this week.
Pretty excited.
It should be your institutionalresearch homepage.
Sends out an email once a week,also to over 100,000 people.
Uh, we've been publishing blogsand research, white papers,
books for a long time over atMeb Favor, and then more
recently on the podcast, 600episodes now, which I can't
(02:23):
believe.
Uh guy had an alum as well.
But as we talk about what'sgoing on in the world, we'll do
just a quick uh update.
Everybody's fat and happy.
There's two kinds of topics thateveryone's talking about right
now.
That's stocks at all-time highsand gold.
You know, nobody was talkingabout gold when it was 3,000.
Now everybody's talking about itat 4,000.
(02:43):
There were signs.
This is a chart of the U.S.
valuation, you know, and we'reback up to, I don't know if you
can quite see it because this isupdated in June, but we're we've
now exceeded that little peak in21.
So the final boss is left on aPE ratio basis.
This is the most expensivemarket since late 90s.
A little different.
You know, the companies havebeen growing, they have some
(03:05):
cash, but still uh they'reexpensive.
I learned yesterday that the topuh nine stocks in SP and NASDAQ
are all the same names.
I feel like that would surprisepeople.
It would be the top 10, butBerkshire is not in the Nasdaq.
So um so you everyone knows yougot this con you got this
valuation problem, you got thisconcentration problem.
(03:27):
I feel like these are well-knowntopics, but everyone that you
talk to is say, look, I boughtNVIDIA, I got the Mag 7, I got
Apple, I got Berkshire, I meanall these stocks, the US stocks
in general, SPY, and they say,Well, I can't sell them.
I know they're expensive, I wantto sell them, but tax man's
gonna kill me.
And so you have these twooptions if you got concentrated
(03:49):
stock holdings.
You just hold it and just suckit up.
Say, look, I'm just gonna dealwith this over time.
I can sit through drawdowns, oryou gotta sell it, pay those
capital gains taxes.
You know, no one likes to uh payto the government what um or the
the tax man, right?
Like that's no one volunteers topay more than they owe.
(04:10):
So you sell, trigger capitalgains, and move on.
But what if there was a thirdway?
It's almost sounds like aeight-minute abs sort of
conversation, but you know, wewe think we we have found a good
solution to this and otherproblems that are similar.
So let's think about it.
How are we gonna do this?
Um, well, the answer we think is351 ETF exchange.
(04:31):
And for those who aren'tfamiliar with that acronym, it's
sort of like a 1031 real estate,but for stocks.
So it's contribution that allowsfor the transfer of assets such
as stocks or ETFs, but reallyit's public assets, stocks or
ETFs, uh, to an ETF withoutrealizing a taxable event.
Now, it's not washing thosetaxes, that would be illegal, of
(04:51):
course, but basically you'recontributing property to an ETF,
getting the ETF in return.
Um, and so why is thatinteresting?
Well, you could move from a veryconcentrated portfolio to a
diversified portfolio.
Uh, and then if you knowanything about ETFs, the ETF can
then rebalance and staydiversified uh for the
foreseeable future.
Most ETFs really never pay acapital gains uh uh
(05:13):
distribution.
So, um, what are the main rules?
Where are we here?
Why isn't this moving over?
There we go.
There's two big rules.
First of all, you can't justgive me 10 million NVIDIA.
Uh the biggest position can't beabove 25%.
And then second, the top fivepositions can't be above 50.
So realistically, what does thatmean?
Well, you need about a dozenstocks or ETFs or pass through.
(05:38):
So spy, for example, is apass-through security where it
looks at the underlyingholdings.
So theoretically, you couldactually contribute 100% SPY.
What do people do in reality?
Well, they tend to submit alittle bit of both.
So they may have a handful ofconcentrated stocks that they
would like to move on from andthen uh round it out with some
ETFs as well.
(05:58):
This is only on the seed, so youcan't do this um after an ETF
launches.
Once an ETF launches, it's justlike every other ETF.
Uh so if you want the 351benefit, you gotta do it at the
beginning.
So again, like a lot of peopleask us these questions, and
they're they're typical ofthings that qualify and don't
(06:20):
qualify.
You know, we just mentioned youcan contribute stock, you know,
and in various uh numbers,anything above really a dozen is
is usually good to go.
You could do things like ETFs,things that don't qualify,
anything private, options,futures.
Uh you can't do 50% NVIDIA and50% cash, you can't do mutual
(06:43):
funds, can't do Dogecoin, allthese things.
Although, by the way, I thinkyou will be able to do next year
contributions into uh 351 fromvarious crypto positions if the
underlying strategy, the ETF, uhhas crypto as a part of the
overall portfolio.
So for uh um, I'm gonna skipover the next fund we're doing
(07:04):
and I'm gonna jump real quick tothe funds we've done.
So we've done three of thesealready.
First one was almost a year ago,uh, and uh kind of announcing it
to the world.
And as you can see, as they'vebeen getting bigger and bigger,
tax was 30 million-ish uh onlaunch, which was a U.S.
stock fund avoiding dividends,targeting companies with low
payouts.
(07:25):
Endw was a uh diversifiedallocation fund using a little
bit of leverage that launchedwith over 100 million.
I think it's over 125 now.
And then GEW launched a coupleweeks ago, uh, and that one was
150 million.
So they're getting bigger andbigger.
That was a global stock fund.
So what's the next one?
Well, we got USEW as the ticker,and that's going to focus on
(07:50):
U.S.
stocks.
So looking at U.S.
stocks as a percentage of thewhole, uh, you know, you know
this concentration issue.
So we're really trying to breakthat market cap link.
Market cap to us is a dangerousplace to be currently.
Historically, market cap hasunderperformed equal weight over
long periods.
Although over other periods,like the last 15 years, market
(08:10):
cap stomps everything else.
Um, and if you look at the equalweight uh, you know, type of
idea, we can accept any type ofU.S.
stocks to be the biggest and themost liquid.
But more importantly, this is uhthis is a fund that's coming in
at a very low expense ratio ofonly 25 basis points.
Uh pretty, pretty screamingcheap.
(08:30):
This launches December 17th.
So what do you got to do beforethen if you're interested?
Everybody's quiet.
No, no, no chat, no questionsyet.
So you guys throw these in ifyou got any um if you got any
questions.
Um what are the dates here?
The dates are you gotta let usknow now.
There's two options.
Uh you got to go through afinancial advisor.
(08:51):
So um you you let us know, hey,I got some clients, they're
doing direct indexing, they gotconcentrated portfolios, I want
to do a strategic rebalance,whatever it may be.
Uh, I want to indicate myinterest.
So we'll help you, we'll giveyou white glove service, walk
you through, kind of help goabout uh contributing here.
And you got to have theseportfolios in by the week before
(09:11):
Thanksgiving.
So November 19th.
You got about a month and ahalf, plenty of time.
And uh and all the paperworkbuttoned down by essentially
Thanksgiving.
And then this will launchmid-December.
If you're an individual, uh ifyou're a family office or
something, we we have um theability to work with various
RIAs or people that can uploadthese, that can walk you through
(09:32):
the process.
Reach out to us.
Certainly we can help you.
This email is golden351 atCambriaFunds.com.
You can also go to the website,it's got a ton of information uh
at CambriaFunds.com about ourETFs currently, but also the
351, a lot of PDFs, a lot ofpodcasts that'll go into uh a
lot deeper discussion on uh whatwe talked about today.
(09:54):
I'm giving you guys a very quickoverview because everyone's so
quiet.
No chat, no questions yet.
Um so we're kind of just uhcruising through.
Um oh, chat's disabled.
Well, just kidding.
Throw it into the uh QA then.
Sorry, you guys.
If you got questions, put it inthe QA, not the chat.
Uh QA.
Thank you, uh Kimberly.
(10:14):
Um so if anybody's gotquestions, QA.
So as of now, um I'm gonna uhI'm gonna kind of start to wind
down a little bit on this very,very quick overview.
Uh hopefully I didn't skip overtoo much because we've done this
so many times, talked about it,that uh it's second nature to
us.
Um one traditional question forpeople is often, hey, look, Meb,
(10:37):
I'm busy.
It's year end.
Will you be doing any any moreof these in 2026?
I expect this one to be ourbiggest yet, so likely in the
hundreds of millions of dollars.
I don't think it'll be over abillion, but it could be.
But uh but we plan to lay out abuffet of a few more choices in
2026, uh, with onboarding maybeat the end of Q1, into Q3, Q4,
(11:00):
uh various strategies.
I imagine a US stock, a globalstock, and an allocation will
probably be the traditional uhbuffet for for next year as
well.
Um you can come see us in LosAngeles.
We're located here in ManhattanBeach.
And um again, here's the websiteand information on the email to
be able to reach out if you guyswant to talk.
(11:22):
I don't see anything in the QA.
Oh, we got something.
What securities can we take?
You know, a lot of people whohave experience with traditional
exchange funds uh have had asour experience because let's
say you got 10 million NVIDIAand you reach out to Goldman or
Eden Vance and they're probablycharging you an arm and a leg
anyway.
But uh traditionally the problemwith exchange fund is A, you got
(11:44):
to hold it for seven years, B,it's expensive.
C, if you got NVIDIA, theyprobably aren't gonna take it
because they say that's allanybody's got is NVIDIA.
And so um, you know, they theyfor at least for us, if it's
some tiny microcap mining stock,you know, from Vancouver, we
probably won't take it.
The basic rules are is it liquidand tradable?
(12:06):
And then does it match the thestrategy?
So the next fund in December isU.S.
stocks, so we won't be takingany foreign stocks, we won't be
taking any real estate orcommodities or anything like
that.
It's just a stock fund.
Uh, but with that onunderstanding, almost all stocks
uh qualify.
It just can't be tiny and itcan't be something that's um not
(12:27):
liquid or tradable.
SPEAKER_01 (12:29):
Okay, can we get a little bit into the mechanics,
like in terms of now that you'vedone a few of these, how long is
the process for an advisor?
How involved is the end client?
Like, what does that look likelogistically?
SPEAKER_00 (12:39):
Yeah, I mean it's it's pretty smooth.
You know, traditionally for umfor the clients, certain
custodians are much easier.
Someone like a Schwab is uh istotally on board.
They love it.
Others like Fidelity, it's it'snot like a universal experience.
You know, you tend to have to gothrough your um local uh um
(13:05):
administrator, product managerversus Schwab, which is just
like a rubber stamp sort ofsituation.
But even then, it's prettysmooth.
We work with our partners, ETFArchitect, Wes Gray, and Pat
Cleary on this.
And so they got that militaryefficiency.
They've done a bunch of these,and we've done three.
So basically, you have to submitan Excel sheet that's got the
(13:25):
client positions.
And so, hey, look, here's thetax lots, here's the cost basis,
here's, you know, basically amonthly report from Schwab.
And uh we make sure that itqualifies.
And assuming it does, uh, thenyou need to sign, you know, one
form client, hey, I know thatthis is happening, this is going
on, I get it.
And basically we say stoptrading.
(13:46):
So end of November, we would belike, stop trading this account.
Uh, you know, you can't havemargin or shorts or leverage on
it.
And basically, you know, acouple days before those
positions will transfer to USbank, and then the day of the
launch, you'll get the ETF back.
Now, the cool part is let's sayyou submit 20 positions, you're
(14:06):
gonna get the 20 positions withan original cost basis for the
ETF.
And so you can kind of pick andchoose what cost basis you want
to uh trade in the future.
So there's no holding period.
You could theoretically sell itday one.
Now you're not gonna want to ifyou contributed NVIDIA at a
dollar because you're gonna bepaying taxes on that original
cost basis.
But if you contribute NVIDIA andmaybe some SPY that doesn't have
(14:29):
as much of gains on it, the SPYcould be uh liquidated pretty
quickly, and you may not have toum pay significant taxes on
this.
So it's a pretty flexibleapproach.
We have people that havesubmitted direct indexing
long-only portfolios that mayhave 100 or 500 positions, and
then they now have all these taxslots on the ETF that they can
(14:49):
manage going forward.
And so there's some people alsothat say, hey, look, you know,
there's like four main usecases.
The first is concentrated stock,the second is strategic
rebalancing.
So if you're stuck in all USstocks, for example, market cap
weight, and you're like, I justgot to get out of this SPY or
the Qs.
And then third would besomething like a direct
indexing.
Fourth, though, if you're afinancial advisor, is is
(15:11):
business development andprospecting.
I mean, I can't tell you guys, II say this, you guys now know
about it, but zero VCs I'vespoken to.
So despite the fact their entirebusiness model is to invest in
private companies that go publicand distribute these massively
appreciated shares, they usuallythen just sell them.
Well, if you're rich enough,you'll just donate them.
I don't know.
(15:31):
But uh, but again, you could uheasily contribute these and uh
get a diversified portfolio andexchange.
And so it's um there's a lot ofdifferent use cases.
None of the companies, like if Iwas a local financial advisor,
I'd go down to my top fivebiggest public corporations and
say, can I talk to your investorrelations?
I now have a solution for your10,000 uh NVIDIA employees that
(15:52):
have like 20 million dollarsstuck in this stock.
We can be able to assist them ina way that uh will help them to
start to diversify away from uhthis company.
So it I think it's a pretty uminteresting idea that has not
gone mainstream yet.
I think 2026 will probably bethe the year of uh the 351.
SPEAKER_01 (16:13):
You mentioned uh let's talk macro for a few
minutes here.
Um you mentioned everyone's fatand happy.
Um I'm pretty sure fat and happyoften leads to the conditions
under which heart attackshappen.
Uh won't be see is a is a legitcause there.
Um are we ever gonna see riskagain, man?
SPEAKER_00 (16:29):
I mean So Um You know, I I've said a couple
things.
You know, we wrote this paper,which I loved, my favorite paper
of the last few years, which iscalled The Bear Market and
Diversication, just talkingabout how the SP has crushed
everything for the past 15years.
And then over the last year ortwo, you've started to see other
things perk up.
(16:50):
So the one there's the onethat's everyone's talking about
this year, which is gold andrightfully so, and silver, those
things are up, you know, a tonat all-time highs.
But then you have some otherthings, and I said this today
kind of quietly beneath thesurface.
So everyone, I had a tweet whengold hit 3,000, and I was like,
gold's dripping, no one in myworld's talking about it yet.
And so today we were like golddripping, it's at 4,000.
(17:12):
Seemingly everyone's talkingabout it now.
But with U.S.
stocks at all-time highs, um,there's some other things that
are doing great.
Foreign stocks, the value tradeuh, you know, is has been
fantastic X US this year.
So a deep value strategy is up.
Um, you know, we have an ETFGVal, which is up well over 40%
(17:33):
this year.
And I'm gonna tell yousomething.
It's it's October, so it'sHalloween, Guyad.
Um, I'm gonna give you a spookystatistic where uh currently
that fund, and you guys got tolook it up, but certainly this
month over the next few weeks,unless it uh, you know, crashes
or goes down.
I think this is a statistic thatwill surprise everyone
(17:53):
listening.
This G-Val ETF, which buys thecheapest countries in the world,
so often places many peopledon't want to invest, and for
many years was totally stinky.
Uh this strategy buys countrieslike Brazilian stocks and
Colombian stocks and Polishstocks and Turkish stocks, UK
stocks, was in there for quite awhile.
Um this fund is now beating theSP on a one, a three, and a
(18:17):
five-year basis.
And people are like, oh my, thatcan't be true, right?
Like US is creaming everything.
And, you know, the challenge issome things are starting to
really uh, you know, comearound.
So um that having been said,there are other areas that have
not started coming around.
I think the ones that are goingto be most obvious to people
(18:38):
would be uh US mid-cap, U.S.
small cap, U.S.
value, right?
Those are doing okay, but youhaven't seen the reversion the
same way you have X US value.
And in broad foreign developedand emerging are doing great
too.
I think, you know, those are inthe kind of 20, 30% range,
whatever they are, those aredoing uh well.
But but until the US market capweight does something else.
(19:04):
So it could be sideways, itcould be down, down a lot.
I don't think anyone's motivatedto move.
If we know anything aboutinertia, people, you know, they
when they're fat and happy, theydon't want to get off the couch.
So uh, but if if somethingstarts to jiggle or things get a
little weird, you could see somepretty big shifts.
Um we said the other day onTwitter it was a valuation chart
(19:25):
of market cap versus equalweight.
I said, you to me, you have tobe crazy to be YOLOing into
market cap weight.
If you're a strategic assetallocator doing this for like,
you know, the next 10 years.
If you're doing if you're atrader and you're trading,
whatever, that's that's adifferent story.
But if you're an investor, Ithink this point in the cycle,
(19:46):
historically from 40 plus caperatio, we have not found a time
in history where a country stockmarket ended the year.
So we're not there yet, we gotthree, two, three months to go.
But if we end the year above 40,there's been no year in history
we could find where the future10-year real returns are above
average.
So meaning like 5% real returns.
(20:07):
And on average, it's zero realreturns for the next 10 years.
So not the best starting point,but you know, as a trend faller,
I'm I'm happily long everythingjust about, you know, but uh
it's uh on the value side, it'sgetting getting a little scary.
Uh I uh I reposted then liked,as you could tell, this post
(20:28):
from you.
Ah, that was a good one.
SPEAKER_01 (20:29):
AI, what's coming next?
You said bear market.
SPEAKER_00 (20:32):
Yeah.
Well, I've had a lot of fun withAI.
You know, I downloaded Sora.
I've been um poking my favoriteuh nemesis of of CalPers and
other institutional managers.
I I posted a video to LinkedIn.
Um I posted a few commercialsfor our ETFs, but my my
compliance friend said, yougotta take these down, Meb.
Even though they're AI and eventhough you're joking, you can't
(20:53):
even mention it.
So I said, okay, I'll just I'llturn my attention to Calpers.
But I posted a video of mepresenting to the Calpers board,
but the CowPers board wasreplaced with Lego figures, and
uh they all started crying whenI said I was gonna fire everyone
and replace you guys with abunch of ETFs.
Uh so I'm having a lot of funwith AI, but uh it seemingly is
(21:14):
sucking all of the air.
I saw a uh I do a lot of startupprivate investing.
I saw a stat the other day thatsomething like 70% of all the
money and deals are going to AIcompanies, which which jives
with my deal flow that I see.
I see it's all AI companies thatare either have no revenue and
are trading at crazy valuationor have some revenue and are
(21:36):
trading at crazy valuation.
Either way, it's crazy, it'scrazy valuations across the
board.
I guess the question is can youhave a bear market and AI and
bull market and everything else?
Um, you know, it uh it'sinteresting.
Even the stuff that's in likethe NASDAQ cues that's not tech
is getting dragged up.
Like Costco.
(21:56):
I love Costco, but it'ssomething like a 50 PE.
You know, it's like a it's likea nutty time.
Um, but again, you know, itfeels like right, it feels like
musical chairs right now.
It feels like everyone knows.
Like it's not like people arelike, no, stocks aren't
expensive.
I was like, everyone's like,yeah, okay, I I this feels
nutty, but I'm I gotta wait.
(22:18):
Like I'm I'm just I'm gonna bethe first one to jump off the
Titanic.
So I think there's certainly alot of things people could be
doing to diversify away frommarket cap US stocks, but I
don't think anyone is quite yet.
SPEAKER_01 (22:31):
Yeah.
Let's uh let's go back uh againfor those I know those right
here for the C credits, I'llemail you afterwards.
Um go back to the 351s foradvisors that are curious and
want to do it.
How would you advise them to goabout talking about it to their
own clients?
Because it's kind of a concept,right?
There's an education processboth ways, you on the advisor.
Yeah, I know it worth.
SPEAKER_00 (22:50):
The first thing is just go to the Cambria Fund
site.
We got a 351 tab.
There's a bunch of PDFs andpodcasts that are pretty good
material, gives you a broadoverview.
I mean, I think the simplest wayis to describe it as hey, look,
um having a concentratedportfolio, and there's reams of
research on this, is a horribleidea on average.
(23:13):
You'll always get the exceptionswhere you can point to someone
and say, Well, look, but yeah,but they've owned their entire
portfolio, it's been inBerkshire for 30 years.
Their entire portfolio has beenin NVIDIA.
And you're like, well, butthousands of other stocks where
their entire portfolio was in Xand it lost all their money or
underperformed.
So uh it's even harder forindividuals, particularly when
(23:34):
they have a constant traderportfolio that made a lot of
money, because then they havethat hindsight bias where like,
this was my ticket.
You know, I I know, I know thiscompany.
I know Enron is the best placeto be, on and on.
So I think the way once they, ifthe client's on board, say,
okay, yes, I realize I need todiversify.
I'm I'm on board.
I that's sound advice.
(23:54):
I don't want to put all my eggsin this basket.
It's kind of like saying, hey,you know, if they know what a
1031 is, say basically you canswap this building out, sell it,
you get another building, anddefer your taxes.
I think that's the best analogy.
It's not a clean one.
If they've experienced exchangefunds, it's not that too
different.
But basically, it's like, hey,you can swap out this portfolio,
(24:16):
get this other portfolio.
And then 351's been in the taxcode for many decades.
It just found its perfectpartner with the ETF structure.
Uh, and so, you know, you you'veseen a lot of prior art.
There's been over a hundred ofthese now.
Uh, so it's it's kind of thebest way I would describe it is
that you can diversify in atax-deferred manner and do it in
(24:39):
a way that's that's clean with alot of um, you know, when I we
were talking about this a yearand a half ago, it was a little
different because people werelike, Well, you haven't done any
of these, is this real?
Is it legal?
And now, like everyone's doingit.
It's you know, Goldman did onethat was a billion, uh, but
obviously only for one client.
Um, so we're we're we're one ofthe uh I think us and ETF
(25:01):
Architect are really one of thefew that are doing it open
enrollment, being like if you'rea finance advisor, you're an
individual, reach out and uh wecan we can help you out.
SPEAKER_01 (25:10):
Oh, we got one more question.
Why do you want more question?
Hold on.
Uh which we'd like to talk abouthow the Kimberly ETF gets
managed once launched and allthe assets are mixed.
SPEAKER_00 (25:18):
So uh thanks, Kimberly.
Um it depends on what thestrategy is.
So for our next fund, it's aU.S.
stock strategy.
And it depends a little bit onwhat's contributed.
So here's another example.
You can go back and look at ourold ones, so like our endowment
ETF, ENDW.
You know, ENDW is meant to be uhbroadly replicate endowment
(25:41):
style allocation and usesleverage.
So it gets up to 140% leverage.
So if you look at that fund, itowns ETFs, it owns some treasury
futures, but it had a lot ofstocks that were contributed.
There's sort of a glide path,depending on what was
contributed.
You know, we say it could takeup to a year to get to the final
portfolio.
(26:02):
That having been said, we expectmonth one, week one, really,
because of what was contributed,and it's only under the universe
that we're accepting, to reallyalready be at a correlation, a
beta to the final strategy wellover 0.9.
So already month one, you'rekind of you've got the beta of
what the correlation of wherewe're going.
(26:23):
And then over time, we'reextremely conservative on uh,
you know, kind of notantagonizing the regulators.
Others are are not.
They they uh I think fly way tooclose to the sun on some of the
ways they operate, not just uhthis world, but you know, in
general.
And so um it it it will dependon each fund.
(26:44):
So this one in December is USonly stocks, long only.
But if you look for us as in2026, uh we may have a totally
different buffet of ideas, andyou can kind of pick and choose
which one uh you may beinterested in.
SPEAKER_01 (26:58):
That's uh probably a good place to wrap this uh
webinar up, unless uh Web Mip,you've got anything else?
SPEAKER_00 (27:03):
No, you guys please reach out to me.
We have uh, you know, uh a lotof folks here that'll be happily
to set up a call, shoot you anemail, talk about it later.
And uh and if you're in thelocal, you can come say hi.
SPEAKER_01 (27:15):
There you go.
Appreciate everybody that'shere.
You'll get an email from meshortly.
Thank everybody for the uhattention, and we'll see you
next time.
Cheers, everybody.
Good Dodgers.
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