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How Cache Built the Modern Exchange Fund with 99% Correlation

Our Index Sync feature brings our funds to tight alignment with the S&P 500 and Nasdaq-100 benchmarks.

Srikanth Narayan

Founder and CEO

Christopher Lange

Head of Investments

^{Last Updated: Sep 2025}^‍
If you've worked in big tech, participated in a company's IPO journey, or invested early in a high-growth venture, your portfolio likely has one or two dominant stocks. We've witnessed this firsthand in thousands of conversations with investors: a VP with 60% in Microsoft, an early engineer with 80% in Palantir, an executive with 99% in Nvidia. The pattern repeats across the industry.

It’s a familiar dilemma: Sell to diversify, and you trigger a massive tax bill. Hold, and you’re exposed to the volatility and risk from a single stock.

Exchange funds have historically offered a way out to the ultra-wealthy, but the product suffered from structural inefficiencies: unpredictable capacity, limited access, tracking error concerns, and consistently high fees.

That’s the problem we set out to solve. In just over a year, Cache has broken through those structural barriers, earning the trust of investors and surpassing $750M in assets. This market response speaks volumes.

Reinventing the Exchange Fund, with S&P 500 and Nasdaq-100 Benchmarks

A few months ago, we announced our breakthrough Index Sync technology, a mechanism for aligning exchange fund portfolios to benchmarks with greater precision. We implemented it in two of our flagship funds, Bedrock (S&P 500) and UNIX (Nasdaq-100), available to qualified purchasers. And, the early results are now in.

Results that speak for themselves

Our two funds implementing Index Sync now track their benchmarks with remarkable precision.

‍Bedrock closely models the S&P 500 benchmark (~1 beta to the benchmark).

UNIX, benchmarked to the Nasdaq-100 index, has achieved a 0.99 correlation to the index.

Exchange funds aim to approximate a benchmark by carefully balancing contributed stocks. Given the complexity of assembling the right stocks from diverse investors, we believe these results are exceptional.

Before we dive in, let's understand the two key risk metrics: correlation and beta.

Time out

What do correlation and beta measure?

Correlation measures how closely an investment’s returns move in relation to a benchmark. It’s a backward-looking statistic used to assess how well an exchange fund has tracked its benchmark over a given period.

A correlation of 1 means the two move perfectly in the same direction, 0 means they move independently, and –1 means they move in opposite directions.

Beta measures how much an investment moves compared to a benchmark, typically a broad market index. A beta of 1 means the investment moves in line with the benchmark. A beta above 1 suggests slightly more responsiveness to market changes; a beta below 1 implies less volatility and potentially lower returns.

For example, a beta of 1.05 means the fund has historically moved about 5% more than the benchmark—up or down. If the benchmark goes up or down 10%, the fund goes up or down 10.5%.

Cache Exchange Fund - Bedrock (S&P 500 Aligned)

Launched on July 16th 2025, Bedrock is designed for investors seeking to diversify their concentrated stock holdings for broad market exposure.

Although Bedrock launched recently, early results have been encouraging.

Portfolio exposure to over 450 underlying stocks across all sectors.

Beta: Forward-looking beta to the S&P 500 Benchmark of 1.03.

Close alignment across all 11 GICS sectors in the S&P 500.

Cache Exchange Fund - UNIX (Nasdaq-100 Aligned)

Launched on August 30th, 2024, UNIX is designed for concentrated stockholders to diversify into a growth-oriented portfolio. We implemented Index Sync in July 2025 and saw rapid progress toward benchmark alignment.

Correlation: As of Aug 2025, the realized correlation to the Nasdaq-100 has improved to 0.99.

Beta: Forward-looking beta of 1.04, indicating tight alignment with the index.

Sector Alignment: Close alignment across key sectors: Information Technology at 49.1% vs 53.3%, Communication Services at 16.9% vs 15.8%, Consumer Discretionary at 11.7% vs 13.3%.

How We Engineered Index Precision

Traditional exchange funds aim to replicate broad-market exposure, but demand for tax-efficient diversification varies dramatically from stock to stock. While many stocks have multiplied in value over the last bull run, others have barely moved at all.

To replicate a broad-market index accurately, traditional funds must find appreciated stock in underperforming sectors—an incredibly difficult task. As the supply of these stocks is relatively thin, they’re often forced to turn away the very stocks investors actually want to diversify tax-efficiently.

This traditional approach has resulted in difficult choices between creating somewhat imbalanced sector exposure, which can result in portfolio drift over time, and narrowing eligibility that often excludes the stocks investors hold the most.

Cache rebuilt the exchange fund architecture from the ground up.

At the heart of the new model is Index Sync, our method of dynamically aligning each fund to its benchmark, whether the S&P 500 or Nasdaq-100, using an ETF as an integral part of the portfolio. Because ETFs can track their benchmarks with precision, we are able to fill sector gaps and manage portfolio drift tax-efficiently.

We also rethought what happens at intake. Each contributed stock is assessed on its headline value, but also on how it fits the benchmark: sector alignment, style exposure, and risk contribution. That lets us accept more of the stocks people actually hold, while keeping the portfolio on track.

The result is a structure designed for greater predictability and alignment.

Trusted by leaders in tech and finance.

See if you are a match

The job titles and companies mentioned are for illustrative purposes only and are not endorsements but examples of the types of investors in the Cache Exchange Fund.

Setting a New Standard

For most of their 70-year history, exchange funds served a narrow set of ultra-high-net-worth investors. Operational opacity was the norm, and upon exit, investors received a varied selection of stocks based on the manager’s discretion.

Cache has now set a new standard.

Our portfolios are designed to closely track the S&P 500 and Nasdaq-100.
After seven years, investors receive a representative basket that contains ETF shares and stocks.
High-growth names can be contributed without sacrificing index alignment.
Minimums start at one-tenth of the traditional thresholds.
Our funds close biweekly.
All with vastly lower fees.

This is not just a better exchange fund. It’s a new model for how concentrated stockholders can diversify tax-efficiently.

Holding a concentrated stock position, and looking to diversify tax-efficiently?‍

👉 See if you qualify for the upcoming fund close.

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Disclosures

Securities are offered through Cache Securities LLC, a member of FINRA and SIPC. Advisory services are provided by Cache Advisors LLC, an SEC-registered investment adviser to the Cache Exchange Funds. Both entities are under the common control of Cache Financials, Inc., and are collectively referred to as “Cache.” Registration with the SEC does not imply a certain level of skill or training.

This material is provided for educational purposes only and does not constitute investment, tax, or legal advice. Nothing contained herein should be considered an offer or solicitation to buy or sell securities. Cache does not make investment recommendations or consider individual investor circumstances. While information is believed to be reliable, it is not guaranteed. For more information and additional disclosures, please visit usecache.com. Examples of investor concentrations are included for illustrative purposes only and do not constitute recommendations of any specific securities.

Any testimonials or reviews by third parties are unsolicited. Cache does not provide compensation in exchange for those statements.

Cache Exchange Funds are alternative investments offered only to investors who meet specific eligibility requirements. These funds are intended for investors who can tolerate long-term commitments, limited liquidity, and higher fees than traditional investments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Exchange Funds are designed to defer, but not eliminate, capital gains tax obligations. Diversification may help manage risk, but does not guarantee a profit or protect against loss.

Certain Cache Exchange Funds employ a strategy called Index Sync, which gains exposure to broad-based market indices by investing indirectly in exchange-traded funds (ETFs) sponsored by unaffiliated third parties. This strategy is available only to designated Qualified Purchaser funds. Cache may collaborate with ETF sponsors on research or operational matters, and may enter into solicitation or distribution agreements, typically without receiving compensation. However, Cache retains full discretion over investment decisions and has no obligation to invest in any particular ETF. All investments are selected based on their alignment with the fund’s stated objectives and may be adjusted as portfolio needs evolve. Each fund may also invest in Qualifying Assets as defined in the offering documents. These may include real estate, private funds, or other investments consistent with IRS and SEC requirements for exchange funds. Investors should carefully review all offering materials before making an investment decision.

Performance and Investment Disclosures

Cache Exchange Fund UNIX, LLC (“UNIX”) was incepted on August 30, 2024, and began implementing the Index Sync strategy on July 15, 2025. Cache Exchange Fund Bedrock, LLC (“Bedrock”) was incepted and implemented the Index Sync strategy on July 16, 2025.

The Global Industry Classification Standard (GICS) is a framework developed by S&P Global to categorize public companies into sectors and industries. It includes 11 primary sectors. Some companies may not be easily classified due to the nature of their business and may be listed as unclassified. GICS classifications may change over time and are not updated on an ongoing basis by Cache.

As of Aug 31, 2025, UNIX’s portfolio was allocated across various GICS sectors, including information technology, communication services, consumer discretionary, health care, industrials, financials, consumer staples, energy, utilities, materials, real estate, and unclassified holdings. These allocations may differ from those of the Nasdaq-100 Index, which serves as a benchmark for comparison purposes.

Cache Exchange Funds may hold investments both directly, through contributed securities, and indirectly, through ETFs. ETF exposure is subject to change. A full accounting of positions will be made available to investors through the Inspection Report before making a capital commitment.

The S&P 500 Index is a market capitalization-weighted index of 500 leading publicly traded U.S. companies, widely regarded as a benchmark for large-cap equity performance. The Nasdaq-100 Index (NDX) tracks the 100 largest non-financial companies listed on the Nasdaq exchange. These indices are unmanaged and are shown for comparison purposes only. Investments cannot be made directly in an index.