Too much of your wealth in one stock?

Index Sync is a new feature developed to power our newest exchange fund benchmarked to the S&P 500 and to help overcome key limitations in traditional exchange fund construction. Historically, exchange funds diversify concentrated stock positions by pooling contributions from multiple investors, a process that can get more complex as the benchmark broadens.

With Index Sync, we rebalance the fund’s holdings using an ETF that mirrors the benchmark. This allows us to gain exposure to the index’s constituents, even if they aren’t contributed directly to the fund. Because ETFs can adjust to shifting index weights tax-efficiently, this mechanism enables the exchange fund to track its benchmark more precisely.

Index Sync is available exclusively in our Select Fund series, open to Qualified Purchasers (those with 5 million or more in investable assets), covering the S&P 500, S&P 500 Growth, and Nasdaq-100 benchmarks.

Cache has collaborated with multiple top-tier law firms to address long-standing inefficiencies in exchange fund design. Index Sync is the result of that work – a breakthrough structure that allows the exchange fund to contribute stocks into an ETF to help steer the fund closer towards its index benchmark.

In the fund documents, you will find relevant legal opinions that support the structure from both regulatory and tax compliance perspectives.

Alpha Architect is a U.S.-based investment firm known for its expertise in systematic, research-driven strategies and for building a robust ETF infrastructure platform. Beyond managing their own funds, they enable other asset managers to launch ETFs through their platform.

Cache partnered with Alpha Architect because of their depth in ETF operations and a shared commitment to making institutional-grade solutions accessible to individual investors. Together, we believe we can make tax-efficient investment tools more accessible.

Cache Exchange Funds anticipates investing in unaffiliated ETFs sub-advised by Alpha Architect and advised by ETF Architect. As of May 2025, total assets managed by Alpha Architect and ETF Architect are approximately $18 billion across ETFs and SMAs.

Alpha Architect was founded by Wes Gray, PhD, in 2010. After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago, where he studied under Nobel laureate Eugene Fama. ETF Architect has helped launch over 75 ETFs and is recognized as one of the most capable partners in the ETF infrastructure space.

Cache Exchange Funds don’t follow a fixed rebalancing schedule. Instead, we approach rebalancing opportunistically, using it as a tool to bring the portfolio closer to its benchmark while balancing incoming stock contributions, liquidity considerations, and long-term tax efficiency.

Once an ETF rebalance transaction is completed, benchmark alignment occurs continuously within the ETF as it seeks to align with the benchmark, helping it automatically adapt to shifting market conditions.

Outside of the ETF rebalancing strategy, Cache will generally seek to avoid selling contributed securities due to the tax implications associated with such transactions

Yes, but mostly in ways that are designed to enhance efficiency and alignment with the benchmark.

With Index Sync, we use a portion of the incoming portfolio to build a position in a benchmark-aligned ETF. This provides the fund with immediate, diversified benchmark exposure, while allowing greater flexibility for incoming stocks.

That said, the core principles of exchange fund management remain unchanged: investor contributions are pooled, concentration risk is diversified, and the structure is designed for tax deferral and long-term investing.

Given the mandate of the ETF, which is to deliver exposure to the broad US market, and the ease of tax-efficient rebalancing within an ETF, the ETF will closely track the S&P 500 Index. *The ETF is anticipated to have a tracking error of within 1% of the S&P 500 benchmark.

For the Exchange Fund, which operates under different portfolio constraints, we guide investors that our goal is an annualized tracking error of 2% to 4%, and we aim to improve upon the guidance with Index Sync.

Rebalancing with an ETF offers several key benefits designed to improve the investor experience and long-term outcomes:

• Tighter Benchmark Tracking Goals: The ETF provides the exchange fund with exposure to benchmark stocks, including those not contributed by investors, thereby helping the fund stay closely aligned with its target index.
  
  
• Higher Capacity: Exchange funds historically had to reject investors who needed them the most, as capacity would fill up quickly for these stocks, leaving many investors disappointed. ETF rebalancing helps expand capacity for these in-demand stocks.
  
  
• Improved Diversification: Investors gain broader, more balanced exposure faster, with less dependency on the balance of contributed stocks to be built up over time.
  
  
• Tax Efficiency: ETFs can rebalance internally without triggering capital gains, allowing them to adapt when stocks are added or removed from an index.

In short, ETF rebalancing gives investors a more precise path to diversification, without sacrificing the tax benefits that make exchange funds powerful in the first place.

Your shares are valued on the Closing Date, after the market closes, which is the day your stocks are officially transferred into the exchange fund.

Cache works with an independent fund administrator to perform daily fund accounting and strike a new Net Asset Value (NAV) and share price after each fund close. This NAV determines the number of fund units you receive in exchange for your contribution.

Yes. Cache aggregates all eligible contributions under your account when calculating your management fee. This includes multiple stock positions contributed across different funds or tranches, allowing you to benefit from tiered pricing based on your total contributed amount.*

Yes. Once you redeem from the fund and receive ETF shares, you should be able to trade them on the open market like any other ETF. ETFs that track broad US equity exposures are generally very liquid because the underlying portfolio is very liquid.

Cache anticipates investing in units of new ETFs advised by ETF Architect, a widely regarded ETF platform that manages over 75 ETFs and $17B+ in ETF assets. For all the ETFs on their platform, ETF Architect partners with leading market makers and appoints a designated lead market maker to help ensure an efficient market.

For large trades, if there are concerns about the market’s ability to absorb the sale, we can work with you to facilitate a redemption through one of the financial institutions acting as an Authorized Participant for the ETF.

While Cache does not currently offer direct lending against exchange fund holdings, it may be possible to borrow against your position through our banking partners. Because exchange funds are not publicly traded, borrowing typically requires a custom arrangement with a lender familiar with the structure. 

If you’re exploring liquidity options, our team can connect you with an experienced lending partner who can help evaluate your opportunities and structure a solution that fits your needs.

Yes, though your redemption options depend on the election you make at the time of contribution.

When you join the fund, you’ll choose between two paths:

1. Hold your contributed stocks within the exchange fund – you receive more direct access to liquidity. A 0.10% liquidity fee is added to your annual management fee to help manage the risk of maintaining this flexibility. Your stocks will remain in the fund and will not be rebalanced into the ETF.
   
   
2. Elect to be eligible to participate in the ETF rebalance – your contributed stock becomes eligible for rebalancing into ETF position. If you need liquidity before the seven-year holding period ends, redemptions will be handled on  an as-available basis, considering fund capacity, market conditions, and the interests of all investors. We maintain a forward-looking liquidity model by security and will work to fulfill redemption requests depending on market conditions and fund capacity.

Please note: while rare, Cache retains the right to temporarily restrict redemptions in the event of extreme market volatility, as outlined in the fund’s offering documents.

Cache Exchange Funds are designed as long-term vehicles, and a seven-year holding period is required to fully preserve the tax-deferral benefits of the exchange fund structure, as per current tax laws.

At the time of contribution, investors choose between two options:

1. Hold contributed stocks within the fund
   
   Your stocks remain in the fund’s portfolio and are not rebalanced into the ETF. This path offers more direct access to early liquidity. If you need to redeem before the seven-year term, you may request an early redemption, subject to availability. A 0.10% annual liquidity fee is added to your management fee to help offset the risk of early withdrawals.
   
   Note: This option is only available based on the fund’s diversification needs and liquidity profile.
   
   
2. Participate in the ETF rebalance (Index Sync)
   
   Your contributed stocks are used to acquire shares of a benchmark-aligned ETF. If you require early liquidity, we’ll assess your redemption request on an as-available basis, considering fund capacity, market conditions, and the interests of all investors.

In either scenario, the full tax benefits of the exchange fund structure are only preserved if you remain invested for the full seven-year term. Early redemption may result in the loss of tax deferral.

To participate in Cache’s Select Fund Series, which includes funds benchmarked to the Nasdaq-100, S&P 500, and S&P 500 Growth, investors must meet the following eligibility requirements:

• Being a Qualified Purchaser, as defined under the Investment Company Act of 1940 (generally $5M+ in investable assets for individuals)
  
  
• Contributing qualifying, appreciated stock positions that meet minimum size and liquidity thresholds

Additional considerations apply based on fund capacity, contribution timing, and eligibility for Index Sync rebalancing.