Schwab offers several money market mutual funds, including multiple government and Treasury money market funds with similar sounding names. Two of the largest funds in the marketplace today are the Schwab Treasury Obligations Money Fund Investor Shares (SNOXX) and the Schwab U.S. Treasury Money Fund Investor Shares (SNSXX). Comparing SNOXX vs SNSXX may be confusing because the name and fund details are nearly identical, although there is one important difference.
The Short Answer
Comparing SNOXX vs SNSXX is interesting because they are nearly identical from a risk and return perspective, but the taxation is very different. SNOXX primarily owns Treasury repurchase agreements (repos), while SNSXX owns actual Treasuries outright (which are exempt from state tax).
SNOXX vs SNSXX Historical Performance
Since their common inception, SNOXX has outperformed SNSXX by .16% annualized. This difference has compounded to a 1.01% difference over the past 5+ years. Currently the yield difference is only about .05%, so future performance differences may be roughly similar.
Current Yields for SNSXX & SNOXX
The current 7 day yield is a standardized yield metric for money market mutual funds and the 7 day yields for both SNOXX and SNSXX can be found on the fund’s webpages. See here for SNOXX and here for SNSXX.
What rate is SNOXX & SNSXX paying?
The current interest rate for SNOXX, SNSXX, and other Schwab money markets can be found on Schwab’s money market page.
SNOXX & SNSXX Details
The expense ratio is .34% for both SNOXX and SNSXX. Neither fund charges a load or 12b-1 fees.
Neither SNOXX nor SNSXX has a minimum investment and investors can invest as little as one cent.
I have not checked every brokerage, but SNOXX and SNSXX are generally only available to clients of Schwab.
Like most money market mutual funds, investors can sell SNOXX or SNSXX at any time.
SNOXX vs SNSXX Risks
Hypothetically, an investor could lose money with SNOXX or SNSXX, 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 SNSXX or SNOXX though.
As of June 30, 2023, SNOXX’s portfolio was over $32 billion, while SNSXX was over $15 billion.
IS SNOXX or SNSXX FDIC Insured?
No, neither SNOXX nor SNSXX are FDIC insured.
Holdings
The two funds both invest in Treasury-related securities. However, most of SNOXX’s holdings are in Treasury repurchase agreements (96%), while 100% of SNSXX is in Treasuries that it owns outright. The historical performance and yields are nearly identical because Treasuries and Treasury repos are nearly identical.
Tax Considerations
SNOXX and SNSXX are Treasury funds which means that they invest in Treasuries and related debt instruments. However, 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 the Treasury repos (that SNOXX owns) is subject to state income tax. Income from Treasury bonds (that SNSXX owns) is exempt from state income tax. Therefore, SNSXX is generally a much better choice for any investor subject to state tax.
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 “ultra” share class of these funds, whose symbols are SCOXX (similar to SNOXX) and SUTXX (similar to SNSXX).
Is SNOXX or SNSXX 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 SNOXX has a slightly higher yield. However, nearly all of SNSXX’s income is exempt from state tax, so SNSXX’s after-tax yield is meaningfully higher for investors subject to state taxes.
