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How to Convert an SMA to an ETF with Wes Gray & Robert Elwood | #522
Today’s returning guest is Alpha Architect’s Wes Gray, and he’s joined by Bob Elwood, a business lawyer with a focus on investment funds. Wes and Bob just helped complete a separately managed account to ETF conversion of $770 million, so we had to get them on the show to walk through the process! They walk through the process of doing an SMA to ETF conversion via Section 351 from start to finish. They share some of the more nuances involved in the process and answer some common questions they hear over time. While the most popular ETF story so far this year is the Bitcoin ETF, this is arguably a bigger long-term story and a trend to watch in the next few years.
Key Points
- Wes Gray and Bob Elwood discussed the process of converting separately managed accounts (SMAs) to ETFs, detailing the complexities and benefits, such as tax efficiency and simplification of portfolio management.
- The conversion process involves Section 351 transfers, allowing investors to contribute appreciated assets to an ETF without triggering a taxable event, thereby preserving the capital gains and allowing for more strategic rebalancing.
- Despite the advantages, such conversions require adherence to regulatory compliance and transparency, and may not be suitable for all, especially those with highly concentrated single-stock positions or those unwilling to become part of a regulated fund structure.
Chapters
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| 20:04 | |
| 26:31 | |
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| 35:05 | |
| 37:07 | |
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| 43:53 |
Transcript
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