Weakness in Alpha Architect 1-3 Month Box ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. The longest-tenured manager has a wealth of experience, but other weaknesses limit it to a Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall reasonable fees, but is held back by a pattern of portfolio manager churn. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. Alpha Architect 1-3 Month Box ETF earns a Below Average Process Pillar rating.    The process benefits from the firm's five-year retention rate of 83% over the period. However, the rating is weakened by the parent firm's five-year risk-adjusted success ratio of 0%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. A high expense ratio, with fees ranking in its category's second most expensive quintile, also holds the process back. Fees reduce net returns and are one of the most reliable predictors of future performance.

 The investment strategy as stated in the fund's prospectus is as follows: 


The investment seeks to provide investment results that, before fees and expenses, equals or exceeds the price and yield performance of an investment that tracks the 1-3 month sector of the United States Treasury Bill market.  Under normal market conditions, the fund generally invests substantially all, but at least 80%, and of its total assets in the Box Spreads such that the weighted average maturity of the Box Spreads based upon expiration dates is less than 90 days. The principal investment strategy of the fund will be to utilize an exchange-listed options strategy called a box spread (“Box Spread”).

Below Average

Process

Alpha Architect 1-3 Month Box ETF earns a Below Average People Pillar rating. The team is strengthened by the firm's five-year retention rate of 83%. However, the rating is weakened by the parent firm's five-year success ratio of 20%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The rating is also held back because none of the managers have over $1 million invested in the fund, which would show confidence in the strategy.


The team is backed by Lawrence Lempert, the longest-tenured manager on the strategy, who provides 14 years of portfolio management experience.  The team is small but adequately equipped, with two other supporting listed managers. Together, the three boast eight years of average portfolio management experience.

People

Alpha Architect's track record as a steward is mixed, leading to an Average Parent Pillar rating. One notable advantage of Alpha Architect is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-lowest quintile of category peers. Manager turnover at Alpha Architect over the past five years has been higher than at peer asset management firms, a possible signal that company culture is a bit unstable. The Alpha Architect roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as evidenced by its average five-year Morningstar Rating of 1.6 stars.

Average

Parent

Alpha Architect 1-3 Month Box ETF

BOXX is actively managed. The fund seeks to provide the price and yield performance of 1-3 month US Treasury Bills, less fees and expenses, through the use of derivatives. The strategy employs box spreads.

SPDR Bloomberg 1-3 Month T-Bill ETF

JPMorgan Ultra-Short Income ETF

Cash is king. Yields on cash and cash alternatives are quite good, with rock-bottom risk. A quick look at four cash alternative funds follows.

4 Cash Alternative Funds, For Conservative, Short-Term Investors

The Alpha Architect 1-3 Month Box ETF is a unique ETF that mimics 1-3 month T-bills using a complex box spread strategy. BOXX potentially offers tax benefits compared to traditional T-bills. I rate BOXX a Buy due to its tax efficiency and its ability to provide T-bill like returns.

BOXX: Blending Options, Tax Efficiency, And Ultra-Low Risk

BOXX aims to achieve similar returns as t-bills, with similar risk and volatility. The fund does go through buying 'box spreads', a well-defined options strategy. BOXX seems like a solid cash alternative ETF, or short-term cash management tool.

BOXX: Cash Alternative ETF, 5.8% Options Yield

The Alpha Architect 1-3 Month Box ETF allows retail investors to earn Treasury Bill-like returns from the options market by buying 'box spreads'. The BOXX ETF is a short-term cash management tool that aims to deliver yields and returns similar to 1-3 month Treasury bills, with more tax efficiency. The BOXX ETF is a novel concept with potential hidden risks and is recommended to be placed on a watchlist for further observation and analysis.

News for Alpha Architect 1-3 Month Box ETF ETF (BOXX)