AAUA provides broad exposure to the U.S. equity market through a market-capitalization-weighted portfolio of large-cap companies, without style tilts — a straightforward, low-cost option for core equity exposure. As with the rest of Alpha Architect’s U.S. equity lineup, the fund may strategically replace a stock ahead of its dividend declaration, a mechanic intended to reduce taxable distributions and improve after-tax efficiency.
Strategy Profile
Alpha Architect U.S. Equity 3 ETF: Core U.S. Equity Exposure With Dividend Management
Book a MeetingA profile of the strategy, the firm behind it, and the people who run it, written for advisors evaluating whether a Section 351 exchange is worth exploring with a client. Nothing here is an offer, a solicitation, or a recommendation of any security or investment product.
The Strategy
Strategy characteristics are targets described by the manager, not limits or guarantees, and may change without notice. Information on this page is provided by the manager and has not been independently verified by ExchangiFi.
See If A Client Portfolio Qualifies
Create a free ExchangiFi account, upload holdings, and run the diversification and liquidity tests before you raise the idea with a client. Free to register, free to use, no credit card.
Create A Free AccountAbout The Firm
Alpha Architect was founded in 2010, beginning as an investment consulting firm before being seeded by a multi-billion-dollar family office in 2012. The firm is based outside Philadelphia, Pennsylvania and runs its strategies through both exchange-traded funds and separately managed accounts. On AAUA, Alpha Architect, LLC acts as sub-adviser, with Empowered Funds, LLC (doing business as ETF Architect) serving as the fund’s investment adviser.
A GIPS compliant, independently verified track record refers to the presentation and verification of historical composite performance. It is not a statement about future results, and past performance does not guarantee future results. No performance data is presented on this page. Firm diligence materials, Form ADV and composite performance are available directly from the manager.
The Team
The fund is overseen by Alpha Architect’s co-founders, who lead the firm’s research and portfolio management.
Wes Gray, PhD
Chief Executive Officer
After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago, where he studied under Nobel Prize winner Eugene Fama. He went on to work as a finance professor at Drexel University before founding Alpha Architect, an asset management firm built around an impact mission of empowering investors through education. He has published multiple academic papers and four books, including Embedded (Naval Institute Press, 2009), Quantitative Value (Wiley, 2012), DIY Financial Advisor (Wiley, 2015), and Quantitative Momentum (Wiley, 2016).
Jack Vogel, PhD
Chief Investment Officer
Dr. Vogel conducts research in empirical asset pricing and behavioral finance and is a co-author of DIY Financial Advisor and Quantitative Momentum. He has held instructor and research-assistant roles in the Finance and Mathematics departments at Drexel University and as a finance instructor at Villanova University. He holds a PhD in Finance and an MS in Mathematics from Drexel University, and graduated summa cum laude with a BS in Mathematics and Education from the University of Scranton.
Biographical information is provided by the manager. References to prior firms and roles describe individual professional history only. They are not representations about results achieved at those firms and should not be read as an indication of future performance.
What Is A Section 351 Exchange?
Section 351 of the Internal Revenue Code is a long standing rule: when one or more persons transfer property to a corporation solely in exchange for that corporation’s stock, no gain or loss is recognized on the transfer. It is the same principle founders rely on when they contribute assets to a newly formed company, applied to portfolios of marketable securities. Advisors often describe it as the 1031 exchange of the equity world, though the two provisions are separate and work differently.
In practice, an investor holding appreciated securities contributes those securities in kind to a newly organized entity and receives shares of that entity in return. Because nothing is sold, no capital gain is realized at the moment of the exchange. The investor’s original cost basis and holding period carry over to the new shares, so the deferred gain travels with them and is recognized when the shares are eventually sold. Deferral is the benefit. Elimination is not on offer.
A short walkthrough of the software: uploading holdings, running the diversification and liquidity tests, and reading the results.
What A Contributed Portfolio Has To Clear
80 / 100
Strategy alignment
At least 80 percent of contributed positions should align with the fund's intended portfolio, and 100 percent should sit within the universe of positions the strategy could hold.
25 / 50
Diversification test
Under Section 351(e), no single issuer above 25 percent of contributed value, and the five largest together no more than 50 percent.
Alignment is the manager’s call. The diversification test is the tax question, and missing it can cause the transfer to be treated as a taxable sale in full. Other conditions matter in practice as well. The exchange cannot be a pre arranged sale in substance, post contribution changes to the portfolio are examined, tax law can change, and the Internal Revenue Service may look past the form of a transaction to its substance. This is why the work is done with counsel and a tax advisor rather than on the strength of a marketing page.
More detail, including common questions on qualification, timing and cost, is answered on our Section 351 exchange FAQs.