When you sell highly appreciated stocks to diversify your holdings, you’ll incur capital gains taxes. Depending on your situation, those taxes can eat up more than 35% of your investment, and it can take years of steady appreciation to get back to where you started.
An exchange fund lets you diversify without incurring a tax bill upfront. Every dollar of tax that is deferred is a dollar that's out working for you. Over time, these savings can compound even after you pay all the taxes eventually.
See examples and illustrations, or try our exchange fund calculator.