New supplemented summary prospectus about BOXX [Does this change your opinion of BOXX?]

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urban
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New supplemented summary prospectus about BOXX [Does this change your opinion of BOXX?]

Post by urban »

I have some shares of BOXX (ALPHA ARCHITECT 1-3 MONTH BOX ETF), and today I got a notification from my brokerage about new summary prospectus supplemented June 24, 2024. This is a very interesting reading, particularly the Principal Risks section.
https://alphaarchitect.com/wp-content/u ... pectus.pdf
Does this reading change your opinion about BOXX? Thank you.
rockstar
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Re: New supplemented summary prospectus about BOXX

Post by rockstar »

Nope.

I have less than $10k in BOXX right now. I have no plan to continue to hold it if yields go near its ER. That’s my main issue with it. No idea the losses I would take. You can’t buy and hold it forever.
retiringwhen
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Re: New supplemented summary prospectus about BOXX

Post by retiringwhen »

If the Internal Revenue Service (“IRS”) disagrees with the Fund’s position as to the applicability of this non-recognition rule to the Fund’s disposition of derivatives, the Fund may not have distributed sufficient income or gains to qualify as a RIC. If, in any year, the Fund fails to qualify as a RIC, the Fund itself generally would be subject to U.S. federal income and potentially excise taxation and distributions received by its shareholders generally would be subject to further U.S. federal income taxation. Failure to comply with the requirements for qualification as a RIC would have significant negative economic and tax consequences to Fund shareholders
They are explicitly disclosing the most destructive risk described in detail in other threads and postings by tax experts. I like the idea of the fund, but at this point, I am going to wait out some sort of resolution on the failure to qualify as a RIC question before considering the fund seriously.

The more pedestrian risk of the returns being recharacterized as ordinary income is not show-stopper for me, but it would make the fund much less attractive of course.
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alpenglow
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Re: New supplemented summary prospectus about BOXX

Post by alpenglow »

This is exactly why I've avoided BOXX.
rockstar
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Re: New supplemented summary prospectus about BOXX

Post by rockstar »

retiringwhen wrote: Tue Jul 09, 2024 5:37 pm
If the Internal Revenue Service (“IRS”) disagrees with the Fund’s position as to the applicability of this non-recognition rule to the Fund’s disposition of derivatives, the Fund may not have distributed sufficient income or gains to qualify as a RIC. If, in any year, the Fund fails to qualify as a RIC, the Fund itself generally would be subject to U.S. federal income and potentially excise taxation and distributions received by its shareholders generally would be subject to further U.S. federal income taxation. Failure to comply with the requirements for qualification as a RIC would have significant negative economic and tax consequences to Fund shareholders
They are explicitly disclosing the most destructive risk described in detail in other threads and postings by tax experts. I like the idea of the fund, but at this point, I am going to wait out some sort of resolution on the failure to qualify as a RIC question before considering the fund seriously.

The more pedestrian risk of the returns being recharacterized as ordinary income is not show-stopper for me, but it would make the fund much less attractive of course.
This reminds me of Bitcoin. I’m of the mindset to take advantage of it while the AUM is still small enough to stay off regulators radar. And if the tax cuts expire, the cheaper tax treatment is much more significant. So I’m getting in early and out early.
hmw
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What do you think of Boxx ETF?

Post by hmw »

[Thread merged into here --admin LadyGeek]

I came across this morningstar video recently about Boxx ETF. It was the first time that I heard of such a product.

My understanding is that it tries to offer US T-bill like returns but with some financial engineering, the returns can be taxed at long term capital gain if one is to hold the ETF for over a year.

What are the potential downside? If I have to sell before the one year mark, the capital gain will be taxed at the short term cap gain rate which is the same as money market fund. What am I missing? Are the fees very high? The fee is listed as 0.195% which is not high compared to a money market fund.

Am I missing something?
livesoft
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Re: What do you think of Boxx ETF?

Post by livesoft »

I think the BOXX ETF is discussed often at bogleheads.org so that this is good place to learn about it.
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Re: New supplemented summary prospectus about BOXX [Does this change your opinion of BOXX?]

Post by LadyGeek »

I merged hmw's thread into a similar discussion. I also clarified the thread title.

(Thanks to the member who reported the post and provided a link to this thread.)
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