How to Convert an SMA to an ETF with Wes Gray & Robert Elwood | #522

The Meb Faber Show - Better Investing

The Idea Farm

Business, Investing, Management

4.7 • 938 Ratings

🗓️ 23 February 2024

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

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Summary

Today’s returning guest is Alpha Architect’s Wes Gray, and he’s joined by Bob Elwood, a business lawyer with a focus on investment funds. Wes and Bob just helped complete a separately managed account to ETF conversion of $770 million, so we had to get them on the show to walk through the process! They walk through the process of doing an SMA to ETF conversion via Section 351 from start to finish. They share some of the more nuances involved in the process and answer some common questions they hear over time. While the most popular ETF story so far this year is the Bitcoin ETF, this is arguably a bigger long-term story and a trend to watch in the next few years. (1:39) - Welcome to our guests, Wes Gray and Robert Elwood; Wes’ prior appearances on the show: how to launch an ETF, 2023 Radio Show, 2021 Radio Show (2:11) - Update on Alpha Architect (2:59) - Overview of converting SMAs to ETFs via Section 351 (13:58) - Mutual fund to ETF conversions versus separate account to ETF conversions (19:34) - Weighing the advantages and disadvantages of SMA to ETF conversions (26:01) - Is Your Alpha Big Enough to Cover Its Taxes? A 25 Year Retrospective (26:35) - The case for the tax-free conversion of SMAs into an ETF via Section 351 (34:35) - Alpha Architect’s connection to former Presidential candidate Vivek Ramaswamy (36:37) - Esoteric examples of SMA to ETF conversions (38:06) - When does it not make sense to do a conversion? (43:23) - The future of Alpha Architect Learn more about Bob and Wes: ETF Architect; Alpha Architect ----- Follow Meb on Twitter, LinkedIn and YouTube For detailed show notes, click here To learn more about our funds and follow us, subscribe to our mailing list or visit us at cambriainvestments.com ----- Sponsor: Today's episode is sponsored by YCharts. YCharts enables financial advisors to make smarter investment decisions and better communicate with clients. Visit YCharts to start your free trial and be sure to mention "Meb" for 20% off your subscription (new clients only). Sponsor: Today’s episode is sponsored by The Idea Farm. The Idea Farm gives you access to over $100,000 worth of investing research, the kind usually read by only the world’s largest institutions, funds, and money managers. Subscribe for free here. Follow The Idea Farm: Twitter | LinkedIn | Instagram | Tik Tok ----- Interested in sponsoring the show? Email us at [email protected] ----- Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more. ----- Meb's invested in some awesome startups that have passed along discounts to our listeners. Check them out here! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to the Med Faber Show, where the focus is on helping you grow and preserve your wealth.
0:09.0	Join us as we discuss the craft of investing and uncover new and profitable ideas all to help you grow
0:13.9	wealthier and wiser. Better investing starts here.
0:17.0	Matt Baber is the co-founder and chief investment officer at Cambria Investment
0:20.7	Management. Due to industry regulations he will not discuss any of Cambry's funds on this podcast.
0:25.1	All opinions expressed by podcast participants are solely their own opinions and do not reflect
0:28.6	the opinion of Cambria Investment Management or its affiliates.
0:31.2	For more information, visit Cambria Investments.com.
0:33.4	What is up everybody? We have a truly
0:39.3	fantastic and wonky show today. Our many time returning friend of the podcast, Alpha Architects,
0:45.9	West Gray is joined by Bob Elwood, a business lawyer with a focus on investment funds.
0:50.9	Wes and Bob just complete a separately managed account
0:54.0	to E.T.F. conversion of almost a billion dollars
0:56.8	across thousands of accounts.
0:58.8	So we had to get them on the show
0:59.9	to walk us through how this all went down.
1:02.2	They detailed the process of doing this
1:03.8	SMA to ETF conversion via section 351 from start to finish. They share some of
1:09.6	the more nuances involved in the process and answer some common questions they hear over time like,
1:14.0	why isn't everyone doing this?
1:16.5	While the most popular E.T.F. story of this year so far is the Bitcoin E.T.F.
1:20.3	race, this is arguably a bigger long-term story and a trend to watch in the next few years.
	...

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