Cash Yields Above 4%, Three ETFs Outpace Money Markets After Tax

Cash yields remain above 4%, and three innovative ETFs promise investors higher after‑tax returns than traditional money‑market funds.

The High‑Pressure Evolution of Cash Returns

While short‑term U.S. Treasury bills have settled at a 52‑week average of %4.0, the FDIC’s 12‑month CD average sits at %1.65. The spread underscores that cash management is no longer a set‑and‑forget exercise.

How the Tax Layer Reshapes Net Returns

■Federal, state, and local taxes can shave 30‑35% off money‑market distributions.

■High‑income investors face a %37 ordinary‑income tax rate, whereas long‑term capital gains are capped at %20.

■This differential creates an opportunity to boost after‑tax yields by up to 1 percentage point with the right vehicles.

The Three ETFs Redefining After‑Tax Income

■Alpha Architect 1‑3 Month Box ETF (BOXX): Converts T‑Bill returns into long‑term capital gains via box‑spread options, lowering the tax rate from %37 to %20.

■Janus Henderson AAA CLO ETF (JAAA): Delivers a fixed %4.95 yield from AAA‑rated CLO tranches, keeping credit risk minimal.

■iShares Treasury Floating Rate Bond ETF (TFLO): Provides state‑and‑local tax‑exempt income on Treasury floaters, adding 130 basis points for investors in high‑tax states like California and New York.

Actionable Takeaways for Market Participants

■Investors in the top federal tax bracket should consider BOXX‑type funds that turn ordinary income into capital gains.

■Institutions seeking low‑credit‑risk exposure can use JAAA as a diversification tool.

■Investors located in high‑state‑tax jurisdictions can capture extra yield through TFLO’s tax‑exempt structure.

Captain Rıza Deniz

The tax architecture of cash management becomes increasingly decisive as the Fed funds rate stabilizes around 3.75%. High‑tax‑bracket investors must focus not only on nominal yields but also on the tax character of distributions. BOXX’s long‑term gains model, JAAA’s AAA‑rated credit spread, and TFLO’s state‑tax exemption emerge as the three pillars for liquidity‑seeking portfolios in the current environment.