Why seed an ETF in-kind only to sell a few months later?

Selling should undo the tax benefits of seeding in-kind... right?

Twin Oak Active Opportunities ETF (TSPX) launched in February 2025 with around $440,000,000 in assets.

Justina Lee wrote about it for Bloomberg last week. So did Matt Levine.

TSPX was seeded in-kind with DDOG, SNOW, and 3 ultra-short income ETFs.

IRC Section 351 allows investors to seed ETFs in-kind (provided they meet diversification and other requirements), effectively enabling them to reallocate their portfolios without paying tax, which I previously called a “get out of jail free” card.

I wrote a (meme) book about it: The Adviser’s Guide to Seeding an ETF In-Kind

Enough people reached out about TSPX that I decided to take a closer look.

⚠️ 27 images follow. Open this article in Substack or your browser ⚠️