Polen Focus Growth ETF: A Concentrated U.S. Large-Cap Quality Growth Strategy

Focus Growth seeks long-term growth of capital through an intentionally focused, high-conviction portfolio of approximately 25 U.S. large-cap companies. The team looks for competitively advantaged businesses with a durable earnings profile — high returns on capital and a track record of double-digit earnings growth — and holds them with low portfolio turnover over long time horizons rather than trading around short-term moves. The strategy is benchmarked against the Russell 1000 Growth Index.

Polen Capital is a global investment management firm specializing in active equity and credit strategies. Founded in 1979, the firm manages high-conviction portfolios focused on long-term results. The firm operates through four autonomous teams — Quality Growth, 5Perspectives Growth, Global Emerging Markets, and Leveraged Credit — offering strategies across equity and credit markets.

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.

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.