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Could an investor's contributions be forced to be sold, triggering a taxable event?
Could an investor's contributions be forced to be sold, triggering a taxable event?
Updated over a week ago

The general principle of the Cache Exchange Fund is to avoid selling contributed securities to maintain tax efficiency. However, there are specific scenarios where a sale might be necessary, potentially triggering a taxable event:

Corporate Actions

If a contributed security undergoes a significant corporate action, such as a merger, acquisition, or buyout where the security is bought for cash, this could necessitate the sale of the security. Such events are generally outside the control of the fund management.

Fund Rebalancing or Opportunistic Sales

Although rare, the fund might need to rebalance by selling securities to align with the evolving index. In rare instances, there may also be tax-loss harvesting opportunities presented when certain securities fall below their cost basis.

Liquidity Needs

If the fund needs to raise cash for distributions or to meet other financial obligations, it may have to sell some holdings. This would typically be a last resort, as cash needs are planned well in advance.

We’ll work with investors on a case-by-case basis if a situation arises that might lead to the forced sale of contributed securities, aiming to effectively manage any potential tax implications.

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