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.

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 box spreads.

Alpha Architect 1-3 Month Box ETF aims to match/exceed 1-3 month U.S. Treasury Bills but carries inherent options market risks. Arbitrage activities may fail during financial distress, making BOXX unreliable as a cash equivalent compared to SPDR T-Bill ETF. BOXX offers tax benefits, but these are minor and do not justify the risks for emergency funds or cash equivalents.

BOXX: Do Not Confuse Cash And Cash-Like Return

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The largest bond ETFs are almost exclusively index funds focusing on the broader bond market, or on specific bond sub-asset classes. These ETFs are reasonable investments, but investors can do much better than reasonable. Lots of ETFs offer higher yields, returns, and risk-adjusted returns than these larger ETFs, with extra advantages to boot.

The Largest Bond ETFs Are Good, But These ETFs Are Better

BOXX ETF offers a unique value proposition by using box spreads for low-risk returns and tax efficiency, similar to short-term treasury ETFs. Despite its tax-deferred design, BOXX paid a distribution, introducing a minimal tax liability but diminishing its value proposition. BOXX's expense ratio is higher than other options, but a current fee waiver reduces costs temporarily.

BOXX: Understanding The Fund's First Distribution

BOXX achieves similar returns to t-bills through options. BOXX's investors can generally defer their taxes until a moment of their choosing, paying capital gain rates when they sell. Although the fund is a solid choice, Federal Reserve cuts should significantly decrease returns and after-tax yields in the coming months.

BOXX: Cash-Alternative ETF, 5.6% Options Yield, Risks Abound

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Markets steadily march on to record highs, as Q2 2024 wraps up. Many patterns that emerged earlier in the year once again prevailed through the fog of geopolitical and rate uncertainty.

The ETF Flowdown: Q2 2024

Alpha Architect 1-3 Month Box ETF offers tax-efficient returns that replicate Treasury bill returns through a complex options trading strategy. BOXX has nearly $2.53 billion in assets under management and has performed well since its launch in December 2022. BOXX provides cash-like returns with minimal risk, making it an attractive alternative to money market funds and short-term bond ETFs. However, its complexity and lack of income distribution may not be suitable for all investors.

BOXX: A Clever Treasury Bill Return Replicator Without Taxable Liabilities

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With prices, valuations, and inflation elevated, some investors are looking for comparatively safe, high-quality investments. T-bills, short-term TIPs, and AAA-rated CLOs are three of the best investments in this area. There are fantastic ETFs covering each of these securities.

3 ETFs For Short-Term Risk-Averse Investors

Investment-grade bonds offer investors strong yields with low credit risk. A couple of ETFs offer exposure to these securities with some added benefits, including potential tax advantages and above-average yields. JBBB, CARY, and BOXX look like particularly strong ETFs in this space. A quick overview of these follows.

3 Investment-Grade ETF Buys, With Yields Up To 8.0%

There's been a lot of excitement around a new ETF BOXX, which potentially delivers a return similar to US Treasury Bills, but in the form of long-term capital gains. We compare the merits of this ETF versus others that own Treasury Bills directly, such as BIL and SGOV. We find that for many investors, BOXX may not be superior to simpler alternatives such as BIL and SGOV or owning T-Bills directly.

Thinking Outside The BOXX

The Alpha Architect 1-3 Month Box ETF solves a massive tax problem that has plagued low-risk investments for decades. BOXX uses a simple options strategy called box spreads to earn the rate of return of cash-equivalent money markets. This provides tax deferral and long-term capital gains tax treatment for investors who hold the fund longer than 1 year.

BOXX: My Top 2024 Pick With A 5.5% Tax-Deferred Yield And Brilliant Fund Design

Investors hold more than $6 trillion in money market mutual funds, but declining interest rates may force them to seek higher-yield options. The Alpha Architect 1-3 Month Box ETF offers a unique tax-favored structure and has already garnered nearly $1 billion in assets. BOXX uses a box spread options trading strategy to mirror the payout of ultra short-term Treasury funds, providing tax deferral and potentially lower capital gains tax rates.

BOXX: A Capital Gains Tax Win

The Alpha Architect 1-3 Month Box ETF has performed as designed, returning 5.0% in 2023, alleviating concerns about hidden risks. BOXX utilizes box spreads to replicate treasury bill returns, isolating the risk-free rate within option markets. BOXX may be a tax efficient cash management tool for investors in higher tax brackets, but management fees are high and the outlook for treasury bill yields is worsening.

BOXX: Revisiting Box Spread ETF As A Cash Management Tool

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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)