Glidepath Launches the First Exchange Fund With No Direct Management Fee as Tech Wealth Grows More Concentrated

Glidepath now holds more than $50 million across its exchange funds, backed by investors at Spark Capital, Kleiner Perkins and Susa Ventures

NEW YORK--(BUSINESS WIRE)--Glidepath, the wealth platform built for people whose net worth is tied up in a concentrated stock position, today announced the first close of the Glidepath Core Exchange Fund. It is the first exchange fund to charge investors no direct management fee. The fund launched with contributed shares from accredited technology founders and other investors and accepts contributions starting at $100,000.

The biggest AI and chip stocks have lost about $5 trillion in market value since October 6, while the rest of the large US market gained. At the same time a new wave of IPOs is creating thousands of employees whose savings sit almost entirely in one company’s stock. Most of them face the same three options. They can hold and absorb the risk. They can sell and hand a large share of the gain to taxes. Or they can move into an exchange fund and pay a management fee - usually around 1% - every year they’re in it.

"A lot of the people building the most valuable companies in the world are one bad quarter away from losing a significant amount of the wealth they've earned," said Israel Slodowitz, founder and CEO of Glidepath. "Exchange funds have been around for decades, but have been largely overlooked because the legacy versions were too expensive, too opaque, and too cumbersome. Our mission is to harness the power of the exchange and to strip out layers of friction and costs."

How the Glidepath Core Exchange Fund works

Investors contribute appreciated public stock to the fund under Section 721 of the Internal Revenue Code. That contribution is not considered a sale and therefore no tax is due - the full value of the contribution is fully invested. Investor contributions are pooled with others to form a diversified portfolio that is measured against the S&P 500. Members commit to a seven year term, with their interests growing on a tax deferred basis.

Every exchange fund must hold at least 20 percent of its assets in qualifying illiquid investments. Most exchange funds, from legacy banks to newer digital platforms, fill that sleeve with private real estate and charge an annual management fee of 1 to 2 percent. Glidepath puts the 20% to work, investing in real assets that generate income, cover the fund’s financing costs and compensate the fund manager. They also automated onboarding and administration to keep costs low.

For wealth advisors, Glidepath Core Exchange Fund fills a gap in the concentrated stock toolkit. Direct indexing, tax aware long/short strategies and gradual selling can trim a concentrated exposure, but they rarely offset enough of the tax bill to move a client out of a low basis position and they add their own costs along the way.

"Exchange funds are perhaps the most effective tax aware diversification tool, and one that most advisors have never used with their clients,” said Sara Shores, Strategic Advisor to Glidepath and a former BlackRock executive. “Most people underestimate what deferral is worth. Every dollar paid in tax today is a dollar that stops compounding for you. Fees and high minimums kept exchange funds underused, and our approach takes the management fee out and brings the minimum down to $100,000."

“I’m excited to be among Glidepath’s early adopters - they’ve created a solution that truly addresses my client’s concentration risks,” said Roland Chow, CEO of Optura Advisors Inc., a California-based financial advisor. “Just a few bad weeks this fall wiped out a year’s worth of gains, making this choice more urgent for many of my clients.”

Glidepath plans to launch additional funds in the series with varying investment benchmarks and objectives. Founders, employees and advisors can learn more at Glidepath.ai.

About Glidepath

Glidepath builds exchange funds with no direct management fee designed for founders, operators and early employees whose wealth is concentrated in a single stock. Founded by Israel Slodowitz and backed by investors at Spark Capital, Kleiner Perkins and Susa Ventures, Glidepath is based in New York and opens a diversification strategy once reserved for the ultra wealthy to the people building today’s most valuable technology companies. Fund interests may be offered through Glidepath Securities LLC, a broker dealer registered with the SEC and a member of FINRA and SIPC. Learn more at glidepath.ai.