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

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Below Average People Pillar. The fund gets a Below Average Process Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall attractive fees, but is held back by above-average turnover among its portfolio managers. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Alpha Architect 1-3 Month Box ETF earns a Below Average Process Pillar rating.    The process benefits from low expenses across its parent firm's funds, whose fees rank in their respective category's cheapest quintile on average. The pattern of low costs at the firm indicates that it is focused on delivering strong results for investors. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 17%. The measure indicates the percentage of a firm's funds that survived and beat 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. The instability of management across its parent firm also limits the process. The firm's asset-weighted manager tenure of four years suggests it could do more to hold onto portfolio managers.

 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 supported by the strategy's costs, which rank in its category's least costly fifth. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is limited by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 33% also holds the rating back. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.


Lawrence Lempert, the longest-tenured manager on the strategy, boasts 14 years of listed portfolio management experience.  Lawrence Lempert draws on only two other listed supporting managers. Although, together they are adequately equipped, with nine years of average listed portfolio management experience.

People

Alpha Architect's track record as a steward is mixed, leading to an Average Parent Pillar rating. A strength of Alpha Architect is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the lowest quintile of respective category peers. Alpha Architect has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. The Alpha Architect roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as seen in its average five-year Morningstar Rating of 2.2 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.

Janus Henderson AAA CLO ETF

Vanguard Short-Term Inflation-Protected Securities ETF

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

Angel Oak Income ETF

Janus Detroit Street Trust-Janus Henderson B-BBB CLO ETF

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

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)