
BOXX uses long and short S&P 500 option box spreads to replicate short-term Treasury rates while avoiding annual taxable distributions, allowing returns to compound in share price until sale.
For a California retiree with $500,000 in a 50% combined marginal tax bracket, ordinary income tax on $25,000 annual yield runs about $12,500, while the same gain held over 12 months inside BOXX is taxed as long-term capital gains at roughly $5,500—saving about $7,000 annually. At $1 million, the after-tax advantage scales to $10,000 to $20,000 per year versus a money market fund.
BOXX carries a 0.19% expense ratio and roughly $11.87 billion in total assets under management; it lacks state tax exemption (unlike Treasury bills), carries regulatory interpretation risk if the IRS reclassifies gains as ordinary income, and costs nearly twice as much as the iShares 0-3 Month Treasury Bond ETF (SGOV) at 0.09%.
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