BOXX and SGOV are both exchange-traded funds (ETFs) that invest in short-term fixed income securities, but they have key differences in their investment strategies, expense ratios, and tax implications. BOXX is an actively managed fund that utilizes a box spread options strategy, while SGOV is a passively managed fund that tracks the ICE 0-3 Month US Treasury Bill Index.
Here's a detailed comparison:
1. Investment Strategy and Holdings:
- BOXX: Actively managed, invests in box spreads (a combination of options contracts), aiming to provide returns similar to 1-3 month U.S. Treasury Bills, but with potentially higher tax efficiency. It does not pay scheduled distributions, reinvesting proceeds and potentially increasing NAV. As of July 11, 2025, it had a weighted average maturity of 0.08 years and a portfolio turnover rate of 0%, indicating a buy-and-hold strategy.
- SGOV: Passively managed, tracks the ICE 0-3 Month US Treasury Bill Index, investing primarily in U.S. Treasury securities with maturities less than or equal to three months. It distributes income monthly. As of July 11, 2025, it had a weighted average maturity of 0.11 years, 22 positions in T-bills, and smaller holdings in money market funds and cash.
2. Expense Ratios:
- BOXX: Higher expense ratio of 0.19%. Note that BOXX previously operated under a reduced management fee agreement which ended in January 2025; its expense ratio may have increased since earlier reports.
- SGOV: Lower expense ratio of 0.09%.
3. Tax Efficiency:
- BOXX: Designed for potential tax efficiency, as it does not pay scheduled distributions and its options contracts may qualify for favorable tax treatment under Section 1256 of the tax code (60% long-term, 40% short-term capital gains rates).
- SGOV: Pays monthly distributions, which are generally taxed as ordinary income.
4. Other Factors:
- Net Assets: As of July 14, 2025, SGOV had significantly more net assets (51B) compared to BOXX (6.97B).
- Inception Dates: SGOV was launched on May 25, 2020, while BOXX was launched on Dec 26, 2022.
- Turnover: Both BOXX and SGOV have a turnover rate of 0.00.
5. Historical Performance:
- BOXX's total returns have slightly lagged SGOV, potentially due to its higher management fees. However, past performance is not a guarantee of future results, and BOXX's tax advantages may be beneficial for certain investors.
- SGOV's historical performance has closely followed Treasury yields, with total returns ranging from 0.04% in 2021 to 5.27% in 2024. Year-to-date numbers for 2025 indicate a lower total return. SGOV has generally outperformed its benchmark index, except for the year-to-date numbers in 2025.
In Conclusion:
The choice between BOXX and SGOV depends on individual investor preferences and circumstances. BOXX may be suitable for investors seeking potential tax advantages and who are comfortable with an actively managed fund utilizing options strategies, while SGOV may be a better fit for investors prioritizing low expenses and a passively managed fund tracking a broad Treasury bill index.
