T-Bills Without Tax Bills? This Fund Says It Cracked the Code (1)

A Marine Corps veteran with a finance Ph.D. has come up with a new way to avoid taxes.

Any American holding US government securities has to pay income taxes on the interest they generate. For the richest investors, the Internal Revenue Service’s cut is 37%.

But a year-old investment fund offers returns that closely track short-term Treasuries, with starkly lower tax bills. The fund, Alpha Architect 1-3 Month Box ETF, uses a complex options strategy and a longstanding tax loophole that favors exchange-traded funds.

“We spent seven years figuring out how to do this,” said Wesley Gray, the ...