Schwab offers several municipal (muni) money market mutual funds including the Schwab New York Municipal Money Fund Ultra Shares (SNYXX) and the Schwab New York Municipal Money Fund Investor Shares (SWYXX). Many investors ask about the differences between these two funds since they are two of the largest muni money market mutual funds in the market today. When comparing SNYXX vs SWYXX, it is clear which fund is best for most investors.
The Short Answer
SNYXX and SWYXX are two share classes of the exact same fund! There is no need to compare SNYXX vs SWYXX because the only difference is the minimum initial investment amount and the expense ratio. Investors who can make an initial purchase of $1M or more will get a higher yield with SNYXX.
SNYXX vs SWYXX Historical Performance
Since its inception, SNYXX has outperformed SWYXX by .07% on an annualized basis. This has compounded to a .23% cumulative difference over the past 3 years, which is relatively small. Currently the yield difference is about .15% however, so future performance may deviate further.
Current Yields for SWYXX & SNYXX
The current 7 day yield is a standardized yield metric for money market mutual funds and the 7 day yields for both SNYXX and SWYXX can be found on the fund’s webpages. See here for SWYXX and here for SNYXX.
What rate is SNYXX & SWYXX paying?
The current interest rate for SNYXX, SWYXX, and other Schwab money markets can be found on Schwab’s money market page.
SWYXX & SNYXX Details
The expense ratio is .34% for the SWYXX investor shares and .19% for the SNYXX ultra shares. Since the funds are just different share classes of the same portfolio, this difference in expenses is what accounts for the differences in yield and performance. Neither fund charges a load or 12b-1 fees.
SWYXX has no minimum investment and investors can invest as little as one cent, while SNYXX has a minimum investment of $1 million. My observation is that investors can keep SNYXX even if they sell and their balance falls below $1 million. The $1 million minimum seems to only apply to the initial purchase.
I have not checked every brokerage, but SNYXX and SWYXX is generally only available to clients of Charles Schwab.
Like most money market mutual funds, investors can sell SNYXX or SWYXX at any time.
SWYXX & SNYXX Risks
Hypothetically, an investor could lose money with SNYXX or SWYXX, but I personally do not think that is a realistic risk as I believe the fund sponsor or the federal government would intervene if that were about to happen. Technically, it is possible to lose money in SWYXX or SNYXX though.
As of June 30, 2023, the fund was composed of approximately $872 million in the investor shares and $1.3 billion in ultra shares.
IS SWYXX or SNYXX FDIC Insured?
No, neither SWYXX nor SNYXX are FDIC insured.
Holdings
The two funds are share classes of the same portfolio, so the holdings are identical. The funds own 61% variable rate demand obligations (VRDNs) and 28% tender auction bonds, among other asset classes. 92.5% of the funds’ holdings have an effective maturity of less than one week.
High Balances
Investors allocating more than $1 million may want to consider the “ultra” share class of the fund, whose symbol is SNYXX.
Tax Considerations
SWYXX and SNYXX are municipal funds which means that they only invest in municipal-related securities. However, investors who are not in the highest marginal tax rates may be better off investing in a non-muni money market fund.
Muni Money Market Funds
Investors subject to higher tax rates may consider municipal (muni) money market funds due to the fact the interest is typically exempt from federal income tax (and often from state tax too!). To the extent that an investor is subject to the “alternative minimum tax,” they may want to consider an AMT-free money market (such as SWWXX or SCTXX).
The caveat with muni money market funds though is that the yields can move up and down A LOT. Therefore, the stated yield that an investor looks up on any given day is not necessarily indicative of the future return. To understand why, read my post on muni money market yields.
Rather than expecting a muni money market fund’s stated yield, I encourage investors to expect the trailing average yield (over the past few weeks). Generally speaking, the after tax returns of munis will only be higher than non-muni money markets for those in the highest tax brackets.
Which is Best? SNYXX or SWYXX?
Overall, SWYXX is a good investment for many situations. Those investing more than $1 million should generally go with SNYXX for the higher yield. Investors who are not subject to the highest tax rates may want to consider other funds though.
