Stance Sustainable Beta ETF seeks competitive long-term returns while holding to strict ESG principles. The fund tracks the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index, which excludes companies involved in weapons, tobacco, and fossil fuels, and selects its top ESG performers using a proprietary machine-learning model.
Strategy Profile
Stance Sustainable Beta ETF (CHGX): A Fossil-Fuel-Free ESG Index Strategy
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
Stance Capital, LLC is a Boston-based, SEC-registered investment adviser founded in 2016, specializing in quantitative ESG asset management and research for individuals, families, endowments, and institutions.
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 strategy is run by Stance Capital’s co-founder and its head of quantitative research.
Bill Davis
Co-Founder & Portfolio Manager
Bill Davis founded Stance Capital to bring to market investment portfolios that mitigate material environmental, social, and governance risks while seeking to generate excess returns, allowing investors to align their portfolios with their belief systems. He previously co-founded Empirical Asset Management, where he managed the EAM Sustainable Equity strategy from its 2014 launch, and was founder and CEO of Ze-gen, a venture- and private-equity-backed renewable energy company. He serves on the board of Ceres and leads a shareholder engagement effort within Climate Action 100+.
Kyle Balkissoon
Portfolio Manager & Head of Quantitative Research
Kyle Balkissoon co-leads portfolio management across Stance’s strategies and heads quantitative research for the platform, applying machine learning and portfolio construction methods to systematic sustainable equity investing. He previously led Cognitive Forecasting at IBM and sustainability research at Corporate Knights Capital — the origin of Stance’s data partnership. He holds an M.Sc. in Financial Markets from EDHEC and dual degrees in Mathematical Sciences and Economics from McMaster University.
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.