How Cache Built the Modern Exchange Fund with 99% Correlation

Reinventing the Exchange Fund, with Nasdaq-100 and S&P 500 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, UNIX (Nasdaq-100) and Bedrock (S&P 500), 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. ‍

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

‍Bedrock, benchmarked to the S&P 500, holds the majority of its portfolio in an ETF (AAUS), which closely models the S&P 500 benchmark.

Remember, exchange funds approximate the benchmark quantitatively by carefully balancing the incoming stocks to create a portfolio similar to an index. Given the logistical feat of assembling the right people with the right stocks, we believe that we have delivered exceptional results against our stated goals.

Below, we share investment performance (net of fees) and two key risk metrics: correlation and beta.

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 with a tech sector dominance. 

Key results as of July 31st, 2025:

Performance: Since inception, UNIX has returned 29.9% net of fees. During the same period, the Nasdaq-100 returned 19.3%, indicating that our investors achieved meaningful outperformance. As discussed in our 2024 Review, the outperformance was attributable to favorable stock selection.

Given the mandate for UNIX to move in sync with the Nasdaq-100, we implemented Index Sync. Since implementing this feature, we’ve seen rapid progress toward benchmark alignment.

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

Beta is also tracking in accordance with our objectives. Our current portfolio positioning indicates a forward-looking beta of 1.06 to the Nasdaq-100 Index, suggesting a very tight alignment with this benchmark.

Both correlation and beta are presented gross of fees.

Sector Alignment: Close alignment across key sectors: Information Technology measures at 49.3% vs 53.5% for the benchmark, Communication Services at 17.91% vs 15.03% for the benchmark, and Consumer Discretionary at 9.8% vs 13.2% for the benchmark.

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. Index Sync helps to provide targeted investment exposure closely aligned with the benchmark, which has been considerably more challenging within traditional exchange funds.

While it is too early to offer performance results, here are a few stats about the portfolio:

Portfolio exposure to over 700 underlying stocks across all sectors.

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

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.

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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.

1. Our portfolios are designed to closely track the S&P 500 and Nasdaq-100. 
2. After seven years, investors receive a representative basket that contains ETF shares and stocks.  
3. High-growth names can be contributed without sacrificing index alignment. 
4. Minimums start at one-tenth of the traditional thresholds. 
5. Our funds close biweekly. 
6. 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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