EBOOK · RIA EDUCATIONAL GUIDE
The 351 ETF Exchange, Plainly
Your strategy could be a fund. Your book could seed it.
Most taxable books carry an embedded-gain problem nobody chose. A few positions appreciated for years. A direct-indexing strategy left an account concentrated in its winners. Selling to fix it triggers a tax bill big enough that the problem just sits there and grows.
A Section 351 exchange is one way to move those positions into an ETF without triggering the gain on the way in. For firms running a strategy at scale, it can also be the mechanism behind a growing number of advisor-sponsored ETF launches.
Download the 351 ETF Exchange guide
An RIA's guide to the mechanism, the four conditions to qualify, and how to sponsor your own 351-seeded ETF.
Non-Correlated
Diversification
Agricultural commodities historically show low correlation with traditional asset classes like stocks, bonds, and gold.Adding agricultural ETFs can help stabilize your portfolio during periods of market volatility.
Proven Performance
in Market Downturns
The Teucrium Agricultural Fund Index has demonstrated consistent outperformance during major market corrections.
Example: Outperformed the S&P 500 in all 7 of the last 7 corrections since 2012.
Tangible
Inflation Hedge
Rising global populations and increasing demand for food create structural growth opportunities.
Agricultural ETFs provide exposure to essential commodities like corn, wheat, soybeans, and sugar.
The embedded-gain problem nobody chose
A direct sale to clean up a concentrated, appreciated account hands the client a tax bill. So the problem sits there and compounds.
A 351 exchange moves those positions into a new ETF without recognizing the gain on the way in. Cost basis and holding period carry over. This guide explains how that works, with the limits stated as clearly as the benefits, because deferral, not elimination, is the phrase that matters.
Who this guide is for
Advisors with appreciated client books who want to:
- Move concentrated, low-basis positions without a current tax hit
- Know the four conditions a portfolio has to meet to qualify
- See the five client situations where the conversation usually starts
Firms running a strategy at scale weighing whether to:
- Sponsor their own 351-seeded ETF off an existing book
- Open a fund with committed assets instead of starting from zero
- Run the three-question gut-check before committing
What's inside
An RIA-focused walk through the mechanism, the conditions, and the trade-offs. Inside:
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How a 351 ETF exchange works, and why deferral, not elimination, is the phrase that matters
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The four conditions a client portfolio has to meet to qualify
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What clients can and cannot contribute, and the surprises in both columns
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Five client situations where the conversation usually starts
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How to sponsor your own 351-seeded ETF off an existing book
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The three questions that tell you whether a sponsored launch is worth exploring
About ETF Solutions
Issuer experience matters
ETF Solutions is the turnkey ETF platform from Teucrium, an issuer that has specialized in ETF-based access to commodity and alternative markets since 2009.
We have taken funds through the 351 process across commodity, equity, and crypto strategies, and carry the operational and regulatory load of bringing a fund to market. The first conversation is always educational, with no obligation.
Reach us anytime at (802) 540-0019 or support@etfsolutions.com.
Download the Guide
Get the 351 ETF Exchange guide
The mechanism, the four conditions to qualify, and how to sponsor your own 351-seeded ETF off an existing book.
Important Disclosures and Risks:
For informational and educational purposes only. Not tax, legal, or investment advice. There is no guarantee that any strategy, investment, or ETF will be successful.
A Section 351 contribution defers, but does not eliminate, the recognition of capital gain. Consult your own tax, legal, and financial advisors. Teucrium Investment Advisors LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. There is no guarantee that any ETF launched through ETF Solutions will be successful.