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Exchange Fund Basics
How does the process work to join an exchange fund?
How does the process work to join an exchange fund?
Updated over a week ago

Unlike an ETF or mutual fund, exchange funds are not continuously ready for investment. Forming an exchange fund requires fund managers to bring together a number of investors with the right mix of stocks to meet investment objectives, so formation can take several weeks.

Once a fund manager has identified participants with stocks that meet the fund’s diversification objectives, there is an escrow-like period leading up to the fund’s closing. Then the fund is created, and shares are issued to all the fund participants.

Once it is up and running, the fund manager administers it as an evergreen vehicle, with tax-deferred withdrawals becoming available after seven years of investment.

Read our step-by-step timeline to understand the entire process.

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