BOXX: Do Not Confuse Cash And Cash-Like Return
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The Alpha Architect 1-3 Month Box ETF (BOXX) aims to match or exceed the returns of 1-3 month U.S. Treasury Bills but carries risks due to its involvement in the options market. It is not a reliable cash equivalent, especially during financial distress, compared to the SPDR T-Bill ETF. While BOXX offers some tax benefits, they are minor and do not outweigh the risks for emergency funds or cash equivalents.
December 13, 2024 | 7:30 am
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NEGATIVE IMPACT
BOXX ETF aims to match/exceed 1-3 month U.S. Treasury Bills but carries options market risks, making it unreliable as a cash equivalent. Minor tax benefits do not justify the risks.
BOXX is directly involved in the options market, which introduces risks not present in traditional cash equivalents like the SPDR T-Bill ETF. During financial distress, arbitrage activities may fail, making BOXX unreliable for investors seeking a stable cash equivalent. The minor tax benefits do not compensate for these risks, leading to a negative short-term impact on its attractiveness as a cash equivalent.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100