Toews ETF Offers Tax-Deferred Path to Diversify From Concentrated Stock

NEW YORK, NY – January 21, 2026 – Toews Asset Management has unveiled a novel solution aimed at one of wealth management’s most persistent challenges: how to diversify a highly appreciated portfolio without triggering a massive tax bill. The firm announced the upcoming launch of its Toews Agility Shares Hedged Nasdaq-100® ETF (Ticker: HQQQ), which will offer a one-time opportunity for eligible investors to seed the fund using a tax-deferred mechanism known as a Section 351 ETF Exchange.

Scheduled to list on the Nasdaq on March 9, 2026, the new fund combines a sophisticated tax strategy with a risk-managed investment approach. It targets investors who have seen substantial growth in their portfolios but are hesitant to rebalance due to the significant capital gains taxes they would incur. This "concentration dilemma" often leaves investors overexposed to a single company or sector, a risk that has grown more pronounced after years of strong market returns.

"Many advisors and investors are unaware that a 351 ETF Exchange can be used to fund an ETF," said Phillip Toews, CEO of Toews Asset Management. "We are democratizing a process that has historically been complex, helping investors participate in investments that track the growth of the Nasdaq-100® Index while actively hedging against significant drawdowns."

Unlocking Trapped Wealth: The Section 351 Exchange Explained

At the heart of the HQQQ launch is the use of Section 351 of the Internal Revenue Code, a provision that has been part of tax law for decades but is now being applied in the more liquid and accessible ETF wrapper. This mechanism allows investors to contribute property—in this case, a portfolio of appreciated securities—to a corporation in exchange for its stock, without an immediate taxable event.

For the exchange to qualify for tax-deferral, several stringent conditions must be met. First, the investors contributing assets, known as the transferor group, must collectively own at least 80% of the new ETF's shares immediately after the exchange. This "control" requirement is why the strategy is primarily used for seeding brand-new funds.

Furthermore, the contributed portfolio itself must be considered diversified by the IRS. This typically means adhering to the "25/50 diversification test," where no single security can represent more than 25% of the portfolio's value, and the top five holdings combined cannot exceed 50%. This rule prevents the exchange from being used to simply swap a single, highly concentrated stock position for an ETF share. Eligible investors must already have a somewhat diversified, albeit appreciated, collection of assets that align with the new ETF's investment strategy.

While similar in concept to traditional exchange funds, or "swap funds," which have long been used by the ultra-wealthy, the Section 351 ETF Exchange offers distinct advantages. Exchange funds are typically structured as private partnerships, often requiring a seven-year lock-up period before investors can redeem their shares. In contrast, HQQQ will provide shares in a publicly traded ETF, offering daily liquidity on the Nasdaq exchange and full transparency of its holdings.

Hedged Growth: A Defensive Approach to the Nasdaq-100

Beyond its innovative tax feature, the Toews Agility Shares Hedged Nasdaq-100® ETF is designed with a specific investment philosophy: pairing the growth potential of the tech-heavy Nasdaq-100® Index with a defensive overlay to manage risk. The fund will gain exposure to the index through a mix of ETFs, futures, and individual stocks.

The key to its defensive posture is a "managed-risk options overlay." This active strategy involves using various options contracts—such as puts, calls, and collars—to moderate downside volatility during market downturns. The goal is not to eliminate risk entirely, but to smooth the ride for investors and potentially reduce the severity of losses.

"The past decade has rewarded investors with solid returns, but current market dynamics could leave years of accumulated wealth vulnerable to loss," noted Eben Burr, President of Toews. "HQQQ offers eligible investors a way to diversify and reposition portfolios into a risk-aware strategy without an immediate tax burden."

This approach is rooted in what the firm calls "Behavioral Defense." By aiming to reduce the volatility of market swings, the strategy may help investors avoid making emotionally driven decisions, such as selling during a panic, and stick to their long-term financial plans. The fund is managed by a veteran team at Toews, which has specialized in managed-risk strategies since its founding in 1994.

A New Tool for Advisors and Wealth Managers

Toews' launch of HQQQ is aimed squarely at financial advisors, family offices, and high-net-worth individuals grappling with the tax implications of portfolio rebalancing. The firm is positioning the fund as a powerful new tool that provides greater flexibility and control. To help educate the advisory community, Toews is hosting a webinar titled 'Master the 351 ETF Exchange' on January 27.

The strategy offers a compelling alternative to other tax-management techniques. While methods like gradual selling, direct indexing with tax-loss harvesting, and charitable giving strategies each have their place, the 351 ETF exchange provides a unique path for a wholesale portfolio transition into a liquid, risk-managed product in a single, tax-deferred step.

"This is about control," added Cory Kendall, the firm's National Sales Manager. "We are giving investors more control over the timing of their taxable events while providing the risk management, liquidity and transparency inherent in the hedged ETF wrapper."

However, the process is not without its complexities. The intricate rules surrounding Section 351 exchanges require careful planning and coordination between the investor, their financial advisor, tax professionals, and custodians. The eligibility of contributed assets and adherence to diversification tests must be meticulously verified to ensure the exchange qualifies for tax-deferred treatment. As with any investment, HQQQ carries its own risks, including those associated with equities, derivatives, futures, and options strategies, which will be detailed in the fund's prospectus. The innovation represents a significant step in the evolution of asset management, blending sophisticated tax planning with modern ETF product design to address a critical investor need.