A 351 exchange is a strategic way to transfer a diversified portfolio of assets, typically individual stocks, into a newly created Exchange Traded Fund (ETF) to manage risk and keep investments positioned for potential growth—all without the immediate capital gains tax burden investors might fear.

Is a 351 ETF Conversion Right for You?

While a 351 exchange can be a powerful, tax-efficient path to diversification for some investors, it isn’t a universal fit. Here’s the process: When investors contribute a diversified mix of securities to a newly established ETF, meeting the 25/50 rule, they receive shares of the newly created ETF in return. To ensure the contributions meet specific IRC diversification rules, they are rigorously checked.

Eben Burr is the President of Toews Asset Management and sits on the investment and compliance committees where he helps oversee the culture and direction of the firm. Toews specializes in creating strategies that attempt to limit portfolio losses in declining markets with the client’s financial and emotional wellbeing in mind. Eben is also the President of the Behavioral Investing Institute where he oversees the training of advisors to integrate relational, cognitive, and emotional elements with personal finance to build better plans and stronger bonds. Eben advocates bringing behavioral psychology, introspection, and empathy into portfolio construction, planning, and communication.  Eben lives in Manhattan with his wife, son, and lots of guitars.