The exercise of:
(a) following the original asset; and
(b) then tracing that asset into a substitute,
are distinct processes. The goal of tracing is to identify substitutions. Substitutions locate the value of the original assets in the form of the substitute. What is being traced is not the physical asset itself but the value inherent in it.
(a) tracing is completed; and
(b) the value inherent in the original asset is identified in its proceeds,
the question which then arises is what claims to those proceeds can be made. Tracing enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. It does not affect or establish his claim. The content of the claim will depend on various other factors. Therefore, there is nothing inherently legal or equitable about tracing. Consequently, the rules of tracing must be the same, whatever:
(a) the basis of the claimant’s claim to the original asset; or
(b) the content of the claim he eventually makes to the substitute.
There is a distinction between tracing at:
(a) common law, which adopts a ‘materialistic’ approach; and
(b) in equity, which adopts a more ‘metaphysical’ approach, which allows tracing into a mixture of money, whereas the more rigid, ‘physical stance’ of the common law does not.
To ground an equitable proprietary claim, an equitable ‘proprietary base’ is required. (Christopher Clarke J. In OJSC Oil Company Yugraneft (in liquidation) v. Abramovich  EWHC 2613 (Comm), at ). A beneficiary under an express, resulting, or constructive trust clearly has an equitable proprietary right. Such a right may arise as a result of there being a vitiating factor, such as misrepresentation or mistake. But an equitable proprietary base may also arise under other circumstances such as proprietary estoppel. The governing principles were stated by Lord Millett in the leading case of Foskett v. McKeown  1 AC 102.
For a discussion of the governing principles and proprietary remedies which are available to beneficiaries against the trust property or its traceable proceeds, see paragraph 8.8 of my book the ‘Contentious Trusts Handbook’ published by the Law Society in 2020.
Where, as in Tang Ying Loi v. Tang & Others  the fiduciary has treated the trust fund as his personal bank account, even if he repays the money to the estate, the principal still has the right to elect and
trace into anything else the fiduciary purchased with that money which is now of higher value, e.g. another property/shares. The judgment in that case is discussed in my article ‘Electing between equitable remedies’ published in Trusts & Trustees by Oxford University Press – to which there is a link on the ‘Publications’ page at www.carlislam.co.uk.
A judge who puts a claimant to an early election before making a finding about breach (i.e. at trial), would appear to be acting in excess of their case management powers.