Stashing Cash

AI looks at where to park cash

Disclaimer / Disclosure

Where to stick it?

Both Frec Treasury and Alpha Architect 1–3 Month Box ETF (BOXX) offer treasury-like risk exposure but in different ways. Here’s how they compare:

Frec Treasury

• Structure: A cash management solution offering high-yielding U.S. Treasury investments.
• Yield: Advertises competitive rates similar to direct Treasury investments.
• Liquidity: Likely daily liquidity but may depend on Frec’s operational terms.
• Risk: Backed by U.S. Treasuries, meaning very low credit risk.
• Tax Benefits: Income from U.S. Treasuries is exempt from state and local taxes, a key benefit for high earners.

Alpha Architect 1–3 Month Box ETF (BOXX)

• Structure: Uses a “box spread” options strategy to create synthetic T-bill-like returns.
• Yield: Designed to match short-term Treasury yields with minimal tracking error.
• Liquidity: Trades like an ETF with intraday liquidity, making it easy to buy/sell.
• Risk: Minimal counterparty risk, but a small level of execution risk in options markets.
• Tax Treatment: May receive different tax treatment than Treasuries. Since it’s an ETF using options, gains could be treated as capital gains rather than interest income, which may be a disadvantage compared to direct Treasury holdings.

Which Is Better?

• For simplicity & direct Treasury exposure: Frec Treasury is better if you want pure Treasury exposure without dealing with options mechanics or ETF tracking differences.
• For active traders & intraday liquidity: BOX ETF is ideal if you want easy entry/exit and prefer ETF-based exposure.

Verdict

• If you’re managing cash reserves in a passive way, Frec Treasury is probably better.
• If you’re looking for flexibility in a brokerage account with frequent trading, BOX ETF could work.