Cache Exchange Funds are designed to seek exposure that approximates the characteristics of a designated benchmark index. The applicable benchmark varies by fund. Current examples include the S&P 500, S&P 500 Growth, and Nasdaq-100. Investors should refer to the applicable fund materials for the benchmark associated with a particular fund.
For example, Cache Exchange Funds that track the Nasdaq-100 typically won't rebalance quarterly the way the index itself does. More broadly, Cache Exchange Funds do not typically rebalance their portfolios as frequently or in the same manner as their respective benchmark indexes. Instead, each fund focuses on maintaining a diversified portfolio that approximates the exposure and characteristics of its respective benchmark.
Here's our general approach:
Passive Management: The funds are primarily passively managed, meaning that they do not frequently buy and sell assets to adjust their holdings. This approach reduces transaction costs and potential tax events for investors.
Rebalancing through Enrollment: Instead of regular rebalancing, the funds may adjust their portfolios when there are significant changes in the investment environment by using enrollment windows to adjust the targeted exposure and diversification by adding undersubscribed stocks to the funds.
Use of Cash and New Contributions: The funds may use cash inflows, such as dividends or new investor contributions, to make portfolio adjustments if needed. This can help align each fund more closely with its investment objectives without the need to sell existing assets, which can trigger taxable events.
Our fund managers seek to avoid frequent buying and selling of assets that can create taxable events for fund participants. This strategy aims to maintain stability and consistency in each Cache Exchange Fund’s investment approach while still targeting to provide levels of risk and returns that are similar to their respective benchmark indexes.
For more detail see our guide on how exchange funds work.