De-risking concentrated stock by seeding an ETF in-kind
Up to 25% could come from a single stock.
“Can I seed a new ETF in-kind with one stock?”
The answer is no. And the reason is (lack of) diversification.
However, once the diversification tests are passed, a hypothetical investor could contribute up to 25% of a remaining concentrated position to a new ETF without incurring tax.
This makes Section 351 conversion another important tool in the playbook…