Summary: 2025 has been another banner year for the wealthy, powered by a stock market that continues to outpace the broader economy. As the top 10% see their fortunes swell, a new wave of tax-efficient investment strategies — from ETF conversions to exchange structures — is emerging to manage, and in some cases, defer the tax implications of those historic gains.
America’s wealth gap continues to widen as soaring equity markets drive record gains for the richest households. According to new Federal Reserve data, the top 10% of Americans added roughly $5 trillion to their wealth in the second quarter alone, fueled largely by rising stock prices and mutual fund values.
The value of corporate equities and mutual fund shares held by the top 10% climbed from $39 trillion to over $44 trillion over the past year — a 13% increase that underscores how closely the fortunes of the wealthiest Americans track the stock market. The top decile now controls over 87% of all U.S. corporate equities and mutual fund holdings, according to the Fed’s Distributional Financial Accounts.
“Stock market gains this year have been the single biggest driver of wealth growth at the top,” CNBC’s Inside Wealth reporter Robert Frank noted in a recent segment. Those capital gains have translated into higher tax receipts for the Treasury as well, as wealthy investors realize profits from their appreciated holdings.
ETF Exchanges Rise Amid Tax Concerns
Yet, the jump in taxable gains is also sparking renewed interest in tax-deferred ETF exchanges, known as Section 351 exchanges, which allow investors to diversify concentrated stock or ETF positions without immediately triggering capital gains taxes.
These transactions, governed under the IRS’s Section 351 of the tax code, enable investors to contribute appreciated securities into newly formed ETFs in exchange for shares of the fund — effectively “rolling” gains into a diversified, tax-deferred vehicle. The approach has gained popularity among high-net-worth investors seeking to rebalance portfolios after a year of strong market performance.
The broader ETF ecosystem continues to attract assets due to its tax efficiency, structural flexibility, and cost advantages compared to mutual funds. Recent analyses of the ETF regulatory framework — including SEC Rule 6c-11 — highlight how ETFs leverage in-kind transfers and heartbeat trades to minimize taxable events, features now drawing scrutiny from regulators.
The Ultra-Wealthy Population Is Expanding
The surge in asset values is also expanding the ranks of the ultra-rich. The number of ultra-high-net-worth Americans — those worth $30 million or more — rose 6.5% in the first half of 2025, following a 21% increase last year, according to a new report from Altrata. There are now 208,090 ultra-high-net-worth individuals in the U.S., representing 41% of the global total.
While all wealth groups saw some improvement over the past year — the bottom 50% saw a 6% gain in net worth, per the Fed — the growth has been fastest at the very top, reinforcing how market performance disproportionately benefits those most invested in equities.
