BOXX
Alpha Architect 1-3 Month Box ETF
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BOXX - Fixed Income Emulator - No Withholding Taxes?
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For a short term investment (under 2 years), CDs *are* a compelling risk free investment. However, if you have a state income tax, buying an ETF that holds bills just makes way more sense in my opinion at the moment. 3 month CDs rn are 4.4% new issue, while new 3month tbills are 4.34%, and you dont have to pay state income tax on tbills, so after tax you got a lower yield on CDs which are taxed as ordinary income. Or, if you have no state income tax, BOXX is getting that same 4.4% but can be taxed primarily as LTCG rather than ordinary income, useful if youre holding for longer than a year.
Where are you seeing 0%? I can think of much better ways to flip something pretty much at cost and just stick the money into BOXX for a year for a free $1500. But I don't see the 0% option.
Yes, this is a very common practice, and a nice advantage of SGOV's ETF structure. However, as also mentioned, just get BOXX. This way you won't miss out on being out of the market one to three days every month. BOXX goes up .01%ish every day like clockwork. It will be short term capital gains for the first year, but it sounds like that won't be an issue for you.
What margin regime at webull? If it's reg-T, there's a decent chance boxes are margined at 100%. But if you still wanted to trade on top of the 100k deposit, maybe you could check the margin requirement on short duration funds like SGOV/BIL/BOXX/etc? And if that's still too high, maybe check their margin requirements for plain old T bills. Theoretically you could just suck it up and take the 100% margin requirement on the box and then if you're dying to trade just sell the box, but that feels like unnecessary exposure to the possibility of bleeding your yield with wide spreads. Do you have futures options on Webull? Maybe a european style box there, and then if you need to release funds you could sell a shorter dated box or at least have a variety of choices (keeping in mind futures have different regulatory and margin regime, so that may not always be right). Regarding cost basis tracking, that is a bit of a crapshoot when moving risk assets between brokers.
If you want to convert short term interest into capital gains an ETF like BOXX tries to do just that Now lots of people will say the IRS may rule that BOXX can't do that, and the gains will have to be recognized as interest or imputed interest and not capital gains
BOXX is really your only option. You could also roll your own box spreads every 5ish years. BRK, while not bond-like, pays no dividend, holds a lot of treasuries as well as diversified industries (ie. insurance) so has low correlation with the S&P.
Forgot to add: Accumulating UCITS internally pay 15% in taxes before reinvesting so BOXX would still be better just looking at net returns. However there are other risks involved.
BOXX or BOXA. I also know they will be coming out with more box spread funds in the future
In the US it’s illegal for funds to reinvest dividends or interest of their holdings. If you don’t want to receive interest you have to either invest in an accumulating Ireland domiciled UCIT (though I don’t know any T-Bill UCIT) or just use BOXX.
BOXX aims to accumulate as much as possible, and only distributes as a last resort. I think it’s your best choice.
No - that doesn't exist in the US. A US '40 Act fund which is organized as a RIC (regulated investment company) is required to at least 90% of it's taxable income. That is how funds can stay tax efficient and avoid double taxation in the US. There are some funds that use derivatives to maintain a neutral position and harvest the risk-free rate and they use some potentially sketchy tax work-around to artificially defer distributions. The most popular are BOXX and TOAK which use box spreads.
>My mortgage rate is 2.5% Do not pay that off early. Put $200-250k in HYSA or SGOV or BOXX and invest the rest in total market index funds. You'll be able to pay off the home whenever you need but will be making 4% interest vs paying off 2.5%.
Just some reading: https://www.taxnotes.com/featured-analysis/tax-trap-inside-boxx/2024/03/08/7j8x0 "If all that sounds too good to be true, it’s because it most likely is too good to be true. BOXX’s strategy runs headlong into two code provisions — section 1258 and section 1092 — that are designed to prevent the sorts of maneuvers that BOXX seeks to exploit. In light of these provisions, BOXX shareholders in most states are likely to end up in a worse position than if they had simply purchased Treasury bills. For BOXX shareholders, an ostensibly tax-efficient investment may turn into a tax trap." Maybe I misunderstood but it seems to go against a couple of the rules.
Yes there is a risk the IRS or regulators will issue an opinion that BOXX should be taxed as income not capital gains, then I am sure there would be lawsuits then its up for the courts to decide . However yes there is a risk this could happen Now I don't think you would be required to refile taxes . Now the risk is if this happens , well BOXX has no reason to exist so it might get liquidated and now you could potentially get like 2-3 years (depending on long you hold) all get taxed as ordinary income in a single year and now you have to realize all that income in a single tax year So imagine you stashed away 100k, after 5 years its up to 130k, now the IRS says "We are closing the loophole" now BOXX has no reason to exist , and liquidates and have to take 30k of ordinary income in a single year. Or maybe IRS will say the tax loophole will close in 2026 so you can sell and recognize LTCG before that . So yea its a risk, but as long as they don't close the loophole you can claim it as LTCG
BOXX will give you 5%/year and it will be long term capital gains when you sell
I like BOXX for my emergency fund. Similar to SGOV but its gains come as capital appreciation instead of interest so you only get taxed when you withdraw not constantly and if you hold it longer than a year you get long term cap gains rate instead of income tax. Note instead of treasuries its underlying investment is Box spreads this is a key difference, maybe a dealbreaker for some especially people who are options averse. My current calculated rate of interest is around 5.2% pretax so decently higher than SGOV but with lower liquidity since its a smaller fund. Maybe worth it for your needs maybe not.
If you are in the US - that is not going to exist unless the fund uses some potentially questionable tax workarounds. There are 2 funds that use box spreads which in combination with heartbeat trades may potentially be plausible but there is no guarantee that there will not be a distribution - look at TOAK and BOXX. In the US - most funds are structured as RICs (Regulated Investment Company). This allows the fund to pass the gains the investors so that there is no double-taxation on gains. But to be RIC - the fund is required to distribute at least 90% of the net investment income to investors at least once per year.
BOXX is out there, but its legality is questionable.
BOXX, but it’s probably illegally. https://www.taxnotes.com/featured-analysis/tax-trap-inside-boxx/2024/03/08/7j8x0
Bers the type to try and short the ticker **BOXX** The ticker that literally never has a drawdown 
I just remember a year ago there were rumors of regulators coming after BOXX’s tax treatment
Did the possible tax issues with BOXX ever get settled?
i would put it into BOXX instead. If you hold longer than a year you pay long term capital gains
A mix of treasuries, corporate bonds, and/or something like BOXX or SGOV. Fixed income will of course depend on interest rates, which I assume will be going down over the years, but might not. Just keep in mind that the notational value of longer term bonds can still go up or down over time due to changes in interest rates.
SGOV vs BOXX Compare fees, margin rules etc
The price drop on short term treasuries is negligible. The price drop is based on combination of duration and the size of the move. A 0.2% rise in short term yields causes a negligible drop in price on 30 day t-bill. BOXX is not special better or worse than SGOV in this respect.
That is my illiterate part ...I don't really know how a box spread strategy works...but if I understand you correctly, you mean to say: BOXX is seemingly immune to a yield spkie only because it emulates short term treasuries holdings. If it emulates long term treasuries, it will also suffer from a value drop when yields soar. Do I get you correctly?
Not sure if the below makes sense as I am only semiliterate:... If we have a new BOXX-like product (say it is called COXX) that exposes me to long term treasury yields (say 10yr) by using the a similar box spread strategy, would a spiking yield be a good thing to my hypothetical COXX but a bad thing for my long term treasuries holdings?
SGOV reports an average duration of 0.11 yrs. So if short rates rose 1% in a day, SGOV would fall about 0.11% and recover to its previous trajectory in about five weeks. I don't see a duration reported on BOXX's page, but it holds 1-3 month spreads compared to SGOV holding 0-3 month Tbills, so it should be about the same or slightly higher duration.
Your conclusion is right but your logic is wrong. BOXX has low duration because it holds long box spreads with short expirations. So does a TBill fund like BIL or SGOV, or a floating rate fund like USFR, or a money market fund. As such, they are all minimally affected by changes in yield. It is not about the kind of instrument it holds but the duration.
BOXX is based on short term treasuries. Little interest risk, still counter-party risk though.
I prefer BOXX. No tax until you sell and it can offset capital losses
No, $BOXX is taxed as capital gains. Hence, why all the brouhaha about it. Keep $BOXX for more than a year, and voila…
So basically you sell 1 5000 call, buy 1 5500 cal, buy 1 5000 put, sell 1 5500 put on spx at your target date. This way you're borrowing roughly $50k, and paying the loan up front. Your fill determines the interest rate, but it \*should\* be fairly close to the risk free rate over that period of time. For a December expiration, you're paying roughly $1.5k to do this and effectively financing your margin at \~4.38%. As you hold it, that 1.5k shrinks over time. You can hold it till expiry and nothing bad will happen, but you're losing any money left on the table. If you do the opposite trade, you can close it early and recoup some money, but you actually need to get it filled. The opposite trade \*also\* let's you loan out your excess cash at a good rate, usually better than CDs offer for the same duration. The stock BOXX uses this to generate yield and is one of the better options if you have spare cash in your brokerage and nothing to buy with it.
Could just 75/25 VOO and BOXX and enjoy the win
Not treasurys, but BOXX rolls box spreads and mostly avoids taxable events.
IDK, my entire portfolio is in BOXX and is up 0.02% today (like every day)
Should’ve kept my money in BOXX
Interesting: (You do at least get a break on state taxes with SGOV.) AI Overview The fund BOXX, or Alpha Architect 1-3 Month Box ETF, is an exchange-traded fund (ETF) that uses a box spread options strategy to aim for returns similar to 1-3 month U.S. Treasury bills, but with potential tax advantages. Here's a more detailed explanation: What it is: BOXX is an ETF that seeks to replicate the price and yield performance of 1-3 month U.S. Treasury Bills, but without the taxable income associated with holding those bills.
I didn’t know about PMMF. It seems like a great alternative to SGOV, BIL, BOXX, etc.
Ima just stick with cash and BOXX ETF until the U.S. stops threatening war on its ~~enemies~~ **allies**.
Glad I shifted from tech-heavy ETFs to cash, and BOXX ETF in February. U.S. equities r fuk
Stop the loss. React. You know what’s going on in the geopolitics world. Until the economy and geopolitical atmosphere improves, do not buy US stocks. You don’t need to catch the bottom. You just need to wait for a positive economic and geopolitical outlook, and catch the rebound because the U.S. WILL recover. It just won’t recover in the next couple quarters. Put the money in cash like BOXX.
In my experience the taxation benefits of SPX box spreads depend on your individual tax situation (state taxes, income level). For me it's basically a wash with treasury bonds. However the slightly higher yield tips things in favor of the boxes by enough to be worth it to me. I agree BOXX is a bit spendy for the management fee but I'm starting to move that way due to delaying realization of the gains. Assuming I'm not going to be needing that cash any time soon, it's worth a fairly sizable amount to me every year.
Yes, but better taxation and a slightly higher yield. BOXX is an ETF that replicates it. The main issue with BOXX is the management fees are too high for my liking.
it pays a dividend about 4% Alternative that just goes up; BOXX
Not happy with $BOXX doing a distribution on Aug 14, 2024. Different brokers are treating it differently - Robinhood divided them in dividend, capital gain distribution and Miscellaneous income. Webull divided them into dividend and capital gain distribution. This is now forcing to pay dividend (non-qualified)/income tax on it and defeating the purpose of why I invested into this ETF. Would like to see if there are others with similar risk free capital gain returns.
BOXX (note there is some uncertainty in whether their strategy is allowed tax-wise, but they haven't been shut down yet)
I had put stops that all hit Friday on multiple positions. Going to buy more BOXX and take my 4% MMF for now. Not touching retirement accounts.
I’d put it into treasury bills like SGOV or BOXX
Look at BOXX or SGOV. That’s a totally risk free return well above 2.7% BOXX would have you pay a capital gains tax and SGOV would have you pay income tax. Whichever is lower for you and your time horizon.
> I don't want my money to sit Sit *idle*. Most cash positions are held for stability, emergencies, and/or future large purchases. You want the best return you can get without introducing risk. If you can take on risk, then cash isn’t the standard move. With that said… There’s no shortage of MMFs, but they all tend to leverage short-term treasuries to generate their return. There’s a frequently updated MMF comparison tool out there that tracks the performance of all them. Performance almost always matches the performance of short-term treasuries, minus the fund’s fee. SGOVs fee is low and it often lands at or near the top of the tracker. For many, the convenience of a managed ETF is worth the minor yield difference of direct purchase. Another option, if the plan is to leave the cash *untouched* for 12+ months, is BOXX. The after-fee yield is slightly lower, but the fund is capable of generating LTCGs, which are taxed lower than the usual MMF STCGs.
Moving 90% of my emergency funds and cash to BOXX
https://www.ishares.com/us/products/260652/ishares-treasury-floating-rate-bond-etf There is also BOXX. It helps with reducing taxable income but you don’t need that for a short period of time
BOXX is up 4.96% in the past year. YEAR has a yield of 4.74%.
> BOXX This is very interesting. I didn't know it existed. I think I'm not getting much for my cash in my brokerage account compared to if I was to put it in a high interest savings account. The issue is I like to have cash in my brokerage account in case I want to buy on a sudden dip. Whether I buy or not when a dip happens is another story though. Out of curiosity, how come you chose BOXX instead of something like YEAR, which seems to have a better return?
So the S&P chart has exponential growth. It “always” looks like that, as the more recent years will always show a sharper turn upwards. Look up a logarithmic S&P chart. Those track the daily percentage movements instead of $ value so the exponential component gets factored out, but you see roughly the same pattern. The best thing to do if you’d like to decrease your risk is to buy your way in slowly. Set the money that you’d like to invest to the side and invest a fraction of it one month at a time, so that you get the average price of the few months you spent buying your way in. I like to put money in BOXX and take it out when the S&P has dips. That way it grows at the 4% rate of BOXX and slowly gets transferred into the S&P.
Keep it in BOXX for the next year or 2 and enjoy the interest. There is a lot that can happen due to Trumps spending and tariffs plans. Wait to see how they shake out and time the market. This is another once in a lifetime opportunity.
Good to know. My emergency fund is in Schwabs MMF, so for this scenario it probably makes sense leaving it there versus something like BOXX
Is a MMF not just as good as BOXX, without worrying about capital gains tax?
Appreciate the response my friend, I’m financially illiterate, what is SGOV and BOXX?
Better performance (due to tax advantages) and basically just as liquid: \- SGOV (avoids state tax) \- BOXX (able to benefit from long term cap gains taxation if kept for >1 year)
Keep your cash in $SGOV or $BOXX (if you are rich af) for now. Free money!
Put it in Money Market Fund. SGOV BOXX and etc
Do some research about the BOXX ETF. Its purpose is to no distribute interest payments and theoretically you should only pay capital gains taxes.
I actually have a leveraged golden butterfly portfolio, with which I employ this exact strategy. I use less leverage however and hold cash for rebalancing. Mine is: 20% SSO 20% AVUV 20% UBT 20% UGL 20% BOXX I Rebalance on bands as soon as any allocation goes 10% out of its ideal allocation. Has done very well the past 3 years. We will see what happens the next 3.
It's not that I don't believe you....it's just that BOXX has been around almost two years and IRS hasn't done anything yet....makes me think it won't happen People told me the same thing a year ago when I first found BOXX and it seemed too good to be true. They are like - yeah IRS will shut that down. But it hasn't happened yet
I’d recommend holding off on BOXX… The Internal Revenue Service (IRS) has provisions that may affect this strategy. Section 1258 of the Internal Revenue Code recharacterizes gains from certain transactions as ordinary income if they are deemed to convert ordinary income into capital gains. Additionally, Section 1092 addresses straddle rules, which could apply to the offsetting positions in box spreads. These provisions suggest that the IRS will likely reclassify BOXX’s gains as ordinary income, negating the intended tax benefits.  BOXX shareholders in most states are likely to end up in a worse position than if they had simply purchased Treasury bills. If you don’t believe me read this: https://www.taxnotes.com/featured-analysis/tax-trap-inside-boxx/2024/03/08/7j8x0
BOXX - it reinvests in itself so you don't have to pay taxes until you sell for profit. And it goes up at a very steady rate similar to SGOV/USFR/most money market accounts.
All fixed income funds, even BOXX have theorical interest rate risks. It depends on average duration/maturity of the fund. GBIL is a 0-12 month short duration fund with currently an average maturity of 3.5 months. So if you want to reduce interest rate risk - you would use an ultra-short duration equivalent fund like BIL or SGOV which are 0-3 month funds and currently has an average maturity of 1.2 months. So - it really depends on where you think the yield will be and how long you plan to hold the fund. Depending on the amount and your tax situation - you can also look at muni funds. You can also look at ultra-short duration investment grade paper like MINT and SCUS which may have higher yields than treasuries but higher credit risk. Alternatively - you can just roll treasuries yourself or roll your own box spreads if you want to manage your cash actively based on whatever cash management problem you are actually trying to solve.
BOXX (if its tax treatment trick doesnt get undone to have gains be taxed more as long term cap instead of short term) is best in states with lower state taxes. USFR or SGOV are the best risk free rate assets in states with a state income tax. They hold either rolling short duration treasury bonds or tbills, so theyre exempt from state and local income tax. They get whatever the effective fed funds rate is minus their expense ratio, so they always are better than a HYSA.
Consider BOXX It maintains a return very similar to SGOV or USFR but with less taxes.
If US t-bills don't pay out, you have much bigger problems. You could use BOXX which is technically getting it's yield from financing rate imbedded in options contracts, and has the added benefit of deferring all gains until you sell (can turn income into long-term cap-gain, no distributions). But if t-bills aren't paying out, nothing is safe. Frankly, silly question IMHO.
BOXX is 100% what you are looking for
There is BOXX, but there is still a question mark about how the IRS will handle the tax situation for this type of fund.
Look into BOXX ETF, it basically tries to replicare the short term 3 month interest rate by selling box spreads with very minimal distributions
BOXX seems like a balanced choice for tax efficiency and holding long-term, but TLT/IEF could add speculative growth if you’re okay with rate swings
Long term-investors want to lock in above interest rate senior notes for these 10-20 years corp bonds for income. To say Harvard, Citibank, Prudential insurance default not paying interest the likelihood is very low. Issuers pay bond holders before stocks if Harvard and American icon companies default. Want lower interest one stays with what was suggested. Here is one problem: *ETF (BOXX) has not paid out any taxable distributions since its inception in December 2022. This includes no dividends, capital gains, or return on capital.*
You should hold QQQ LEAPs, and sell put to form a synthetic long QQQ, plus some cash/BIL/BOXX to get the leverage you want. Rebalance by delta.
Thank you, yeah I think it’s probably pretty speculative. I think ill probably go with either SGOV or BOXX. Thanks
What are you buying in 10 years that will require total liquidation (that is what a 10 year horizon means)? Managed-futures trend, style/alt-premia, equities, bonds, cash all together can make for a very diverse portfolio. There are all kinds of options depending on your risk. Foreign and/or value stocks are historically cheap, far from "seriously over-valued" at-least. If you do just want risk-free exposure like a CD, at-least consider taxes and use treasuries if in state with income tax. If no income tax in your state then something like BOXX (they are coming out with longer duration products too, but BOXX mirrors t-bill return stream) would be appealing as it won't have taxable distributions along the way, and then 10 years later when you need to sell it will all be lower tax-rate due to long-term cap-gains. CDs will be taxed as income every year...
I sold 700 shares of BOXX today, and it went through as 100 different orders of 7 shares each. Can someone explain that? This happened a few months ago with a bunch of fills each for 7 shares for a 287 share sell order.