Exchange funds are for investors with a long-term investment horizon, and they require a seven-year commitment to earn tax benefits. However, there are times when investors need to redeem their shares early. Here’s how early redemptions work at different milestones:
0 to 2 years after contribution
With the Cache Exchange Fund, you won’t be able to redeem before two years. We institute a two-year lockup to encourage long-term investors to participate. Each pool is carefully weighted to achieve certain investment goals, and early redemptions hurt your fellow investors.
2 to 7 years after contribution
Between the end of the lockup and the fund’s maturation, early redemption requests are satisfied by distributing your original contribution back to you at a rate that is the lower of:
The contributed stock value at the time of redemption
Or the value of your exchange fund shares based on the fund’s net asset value.
Any remainder is retained until term commitments are met. Note that early redemptions incur a 2% penalty fee.
7 years after contribution
Once you are past the seven-year mark, you can redeem a diversified portfolio on a tax-deferred basis. No redemption fees are applicable after seven years, and your original cost basis carries over to the stocks you withdraw from the fund.
See more details about redemption AFTER seven years.