Why a Section 351 ETF Conversion Makes Sense for Family Offices

01/30/2026

Family offices often manage complex portfolios with long-held, highly appreciated assets. While these legacy positions may reflect decades of successful investing, they also present a challenge: how to reposition or diversify without triggering significant capital gains taxes. This is particularly important for holdings that grow into a large weighting in the portfolio and should be reduced to manage concentration risk.

A Section 351 ETF conversion offers a compelling solution.

What Is a Section 351 Conversion?

Under Section 351 of the Internal Revenue Code, investors can contribute appreciated securities to a newly formed ETF in exchange for ETF shares—without incurring an immediate tax liability. As long as the transaction meets specific IRS requirements, including diversification and control rules, the exchange is treated as a non-taxable event.

Why It Works for Family Offices

1. Tax Efficiency
   Avoiding immediate capital gains taxes allows family offices to preserve wealth and defer tax liabilities until a more strategic time.
2. Portfolio Restructuring
   Legacy positions can be transitioned into a more diversified, liquid ETF structure, aligning with current investment goals and risk profiles.
3. Estate Planning Benefits
   ETF shares are easier to manage and transfer across generations, simplifying estate planning and succession strategies.
4. Operational Simplicity
   ETFs offer transparency, lower administrative overhead, and easier reporting compared to managing a basket of individual securities.
5. Control Over Tax Timing
   Because ETFs typically don’t distribute capital gains, taxes are only triggered when shares are sold—giving family offices control over when to realize gains.

NPF’s Section 351 to ETF

Expected to Launch January 20, 2026: NPF Investment Advisors is launching the NPF Core Equity ETF with a 351 Conversion. Don’t miss this chance to diversify without the tax hit. To learn more and to request your launch kit, visit www.npfinvest.com/etf.

Disclosures

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. To obtain a prospectus containing this and other information, please call 1-800-748-0544 or visit www.npfinvest.com/etf. Read the prospectus carefully before you invest.

Investment Objective: provide total return from current income and long-term capital appreciation. An investment in the Funds involves risk, including loss of principal.

The information discussed herein is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any security, including ETFs. Investing in securities carries an inherent element of risk.

The Fund is distributed by Paralel Distributors LLC. NPF Investment Advisors is not affiliated with Paralel.

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