Traditional exchange funds are private funds (often offered by big banks or financial firms) where multiple investors contribute different stocks and in return each gets an interest in the pooled, diversified portfolio. Craft Pod is built on the same general concept – investors exchange their concentrated stock for a share of a broader portfolio, deferring capital gains tax on the contributed stock. The major difference is what the fund invests in and the benefits that come with it. A typical exchange fund might hold a basket of 50–100 stocks (and maybe some cash or real estate), and you generally have to wait 7+ years before you can withdraw your share in kind. Craft Pod, on the other hand, includes a very special asset class in the mix: private aircraft. This means when you invest, you’re not just swapping stocks with others – you’re becoming part-owner of a fleet of jets. That unique feature brings perks like personal access to the aircraft, which traditional exchange funds do not offer.
Another difference is the time horizon and flexibility. Most exchange funds have a fixed 7-year lock-up (driven by tax rules) and are managed by large institutions with inflexible terms. Craft Pod has a target term of about 5 years, with a planned “recap” or rollover event at that point (more on that in How the 5-year term and recap work). Craft’s approach is to provide more flexibility – allowing investors to potentially exit or continue at the 5-year mark – while still aiming to preserve the tax advantages.
In summary, Craft Pod functions similarly to a traditional exchange fund in terms of tax and diversification but goes beyond by including aircraft ownership and use. It’s an “exchange fund meets private aviation” – providing both financial portfolio benefits and real-world utility that set it apart from the old-school exchange funds.