Fidelity offers dozens of money market mutual funds, including many government and Treasury money market funds with similar sounding names. Two of the largest funds in the marketplace today are the Fidelity Government Money Market Fund (SPAXX) and the Fidelity Treasury Money Market Fund (FZFXX). Comparing SPAXX vs FZFXX may be confusing because the name and fund details are nearly identical, although there is one important difference.
The Short Answer
Comparing SPAXX vs FZFXX is interesting because they are nearly identical from a risk and return perspective, but the taxation is very different. SPAXX primarily owns government-backed repurchase agreements (repos), while FZFXX owns Treasury repos. It is a very slight difference and investor may actually want to consider a Treasury only fund like FDLXX for the tax benefits.
SPAXX vs FZFXX Historical Performance
Since their common inception, SPAXX and FZFXX have identical performance! Currently the two funds have an identical yield too. These funds could really not be more similar!
Current Yields for FZFXX & SPAXX
The current 7 day yield is a standardized yield metric for money market mutual funds and the 7 day yields for both SPAXX and FZFXX can be found on the fund’s webpages. See here for SPAXX and here for FZFXX.
What rate is SPAXX & FZFXX paying?
The current interest rate for SPAXX, FZFXX, and other Fidelity money markets can be found on Fidelity’s money market page.
SPAXX & FZFXX Details
The expense ratio is .42% for both SPAXX and FZFXX. Neither fund charges a load or 12b-1 fees.
Neither SPAXX nor FZFXX has a minimum investment and investors can invest as little as one cent.
I have not checked every brokerage, but SPAXX and FZFXX are generally only available to clients of Fidelity.
Like most money market mutual funds, investors can sell SPAXX or FZFXX at any time.
SPAXX vs FZFXX Risks
Hypothetically, an investor could lose money with SPAXX or FZFXX, 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 FZFXX or SPAXX though.
As of July 31, 2023, SPAXX’s portfolio was over $275 billion, while FZFXX was nearly $5 billion.
IS SPAXX or FZFXX FDIC Insured?
No, neither SPAXX nor FZFXX are FDIC insured.
Holdings
The two funds both invest in government securities, but FZFXX only invests in Treasury-related securities (versus other government securities like agency debt, etc). Most of SPAXX’s holdings are in government repurchase agreements (63%) and agency debt (18%) among other things. FZFXX holds 80% in Treasuries repurchase agreements (rather than repos of other federally-backed bonds). The historical performance and yields are nearly identical because the yields of government-backed debt tends to trade together.
Tax Considerations
SPAXX is a government fund, which means that it invests in government securities. FZFXX is a Treasury fund which means that it only invest in Treasury-related debt instruments. This means that FZFXX is a bit more tax-efficient for those who are subject to state taxes. However, investors subject to state tax should consider a “Treasury only” fund like FDLXX, since a much greater proportion of the income will be exempt from state tax. Also, taxable investors may find better after-tax yields in municipal (muni) money market funds, which offer tax benefits that may improve investors’ after-tax yield.
Treasuries and Treasury Money Markets
Treasuries are treated very differently than other money market assets (including Treasury repos) for tax purposes. Income from government repos (that SPAXX owns) is subject to state income tax. Income from Treasury bonds is exempt from state income tax. Therefore, FZFXX is generally a better choice for any investor subject to state tax, although a Treasury-only fund would be even better (depending on yields).
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!).
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.
High Balances
Investors allocating more than $1 million may want to consider the “Premium” or “Class I” share class of these funds, whose symbols are FZCXX (similar to SPAXX) and FISXX (similar to FZFXX).
Is SPAXX or FZFXX a Better Fund?
As mentioned above, the funds are nearly identical. For investors who live in states with no state income tax or those investing in tax-deferred or tax-exempt accounts (such as IRAs, 401k’s, Roth accounts, etc), then it doesn’t really matter which fund is used. However, some of of FZFXX’s income is exempt from state tax, so the after-tax yield is higher for investors subject to state taxes. These investors may want to invest in a Treasury only fund like FDLXX though.
