Alpha Architect 1-3 Month Boxx Fund (BOXX)
BATS BATS Primary Summary
Gift BOXX Under The Tree Brings Holiday Cheers And No Tax Fears
Alpha Architect 1-3 Month Box ETF earns a Buy rating for its innovative, tax-efficient approach to short-term interest rate exposure. BOXX uses box spreads with European-style SPX options to synthetically replicate T-bill returns, offering NAV appreciation instead of taxable interest. The fund's standout advantage is superior tax treatment, deferring gains and potentially qualifying for capital gains rates versus ordinary income.
BOXX: SA Quant's Favorite Cash ETF
BOXX, an ultrashort bond ETF, receives the highest Quant rating among 61 similar funds, despite a general Quant bias against ultrashort bonds. The ETF employs a box strategy using FLEX options from the OCC, offers attractive dividends and yield, and has a tax-advantaged structure. Overall, BOXX stands out as a compelling cash-equivalent option, especially for investors seeking T-Bill yield with tax efficiency.
BOXX: Tax Avoidance At Its Best, A Happy Holder's Story, Reiterate Buy
I reiterate a buy rating on BOXX due to its steady performance amid market volatility and tax efficiency for high-income investors. BOXX closely tracks the SPDR Bloomberg 1-3 Month T-Bill ETF and slightly outperforms it on a total return basis. BOXX's assets under management have surged from $1 billion to $6.1 billion, with low annual expense ratios and increasing trading volume.
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Alpha Architect 1-3 Month Boxx Fund Profile
| BATS Exchange | US Country |
Overview
The fund is notable for its specialized investment strategy, focusing primarily on a technique known as the Box Spread. By targeting investments that have a weighted average maturity of less than 90 days, it aims to allocate substantially all, if not at least 80%, of its total assets in Box Spreads. This investment approach is predicated on utilizing exchange-listed options to execute the box spread strategy, making it distinct in its operational methodology under normal market conditions.
Products and Services
A deep dive into the fund's products and services reveals a sophisticated approach to investment, with a key emphasis on the use of Box Spreads as its principal strategy. Below is a detailed explanation of the fund's primary investment tool:
- Box Spread Investment Strategy - This strategy involves the utilization of an exchange-listed options strategy known as a box spread. The essence of this approach lies in its execution, which hinges on investing in box spreads with the aim that the weighted average maturity based on their expiration dates will be under 90 days. The box spread is a complex options strategy that involves creating a synthetic position using four options contracts, aiming at benefiting from discrepancies in their price alignments for a theoretically risk-free profit. This method demonstrates the fund's innovative use of financial instruments to achieve its investment goals under normal market conditions.
