Wall Street firms are launching new exchange-traded funds that use options box spreads to deliver Treasury bill-like returns with tax advantages. Two new funds join existing ETFs that exploit the strategy, which generates capital gains instead of interest income, allowing deferred taxation through ETF mechanics. Despite increasing scrutiny from the US Treasury Department, which views the approach as potentially abusive, issuers remain confident the products will withstand regulatory challenges.

The strategy involves combining calls and puts to create risk-neutral positions that mimic T-bill yields while benefiting from more favorable tax treatment. As regulatory attention intensifies, market participants watch whether these innovative ETF structures can maintain their appeal to investors seeking tax-efficient fixed-income alternatives.