Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm Margaret Giles, content development editor for Morningstar, Inc.

More investors are thinking about cash as an investment thanks to higher cash yields.

But those tempting yields can come with big tax bills.

Can investors have their cash and keep it too?

An exchange-traded fund launched in December 2022 aims to make that happen.

Manager Research Analyst Lon Tran with Morningstar Research Services is here to explain the ins and outs of the

Alpha Architect 1 to 3 month box ETF known as box.

Here's our conversation.

Thanks for being here, Lon.

Thanks for having me.

All right, so the box ETF, when it launched in December, got a lot of attention.

So can you explain why it was created and what

makes it stand out? Yeah, the fund has definitely grown a lot recently and I think the main

appeal really is tax. And so the way that box is set up is advantageous from a tax perspective.

What is trying to do is to give you the return of a one to three-month treasury bill,

what we would consider broadly the risk-free rate of the cash-year-rate,

without the interest income that Treasury bill would pay out.

And so if you hold Treasury bill, you get the interest income when the Treasury bill mature,

and also, as you mentioned, the tax bill.

And so that's getting taxed

at the ordinary income tax rate, which is pretty high, and your tax bill can be pretty hefty.

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