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 Government Cash Reserves (FDRXX). Even though these are two of the largest government money market funds in the marketplace today, comparing SPAXX vs FDRXX may be confusing because both the names and underlying characteristics are extremely similar.
The Short Answer
Comparing SPAXX vs FDRXX is interesting because they are nearly identical from a risk and return perspective. Even the holdings of FDRXX and SPAXX are extremely similar. Personally, I consider these two funds identical and interchangeable.
SPAXX vs FDRXX Historical Performance
Since their common inception, SPAXX and FDRXX have nearly identical performance! The annualized difference is only .03%! Currently the two funds have a nearly identical yield too (.01% difference), so I expect the future returns to stay quite close. These funds could really not be more similar!
Current Yields for FDRXX & 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 FDRXX can be found on the fund’s webpages. See here for SPAXX and here for FDRXX.
What rate is SPAXX & FDRXX paying?
The current interest rate for SPAXX, FDRXX, and other Fidelity money markets can be found on Fidelity’s money market page.
SPAXX & FDRXX Details
The expense ratio is .42% for SPAXX and .40% for FDRXX. This .02% difference may account for most of the .03% annualized performance difference. Neither fund charges a load or 12b-1 fees.
Neither SPAXX nor FDRXX has a minimum investment and investors can invest as little as one cent.
I have not checked every brokerage, but SPAXX and FDRXX are generally only available to clients of Fidelity.
Like most money market mutual funds, investors can sell SPAXX or FDRXX at any time.
SPAXX vs FDRXX Risks
Hypothetically, an investor could lose money with SPAXX or FDRXX, 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 FDRXX or SPAXX though.
As of July 31, 2023, SPAXX’s portfolio was over $275 billion, while FDRXX was nearly $218 billion.
IS SPAXX or FDRXX FDIC Insured?
No, neither SPAXX nor FDRXX are FDIC insured.
The two funds both invest in government securities and the allocations are nearly identical. Below is a table of the top 3 holdings:
|US Government Repurchase Agreements (repos)||62.70%||62.95%|
|Agency Floating Rate Securities||18.47%||18.15%|
|US Treasury Bills||10.51%||10.15%|
The historical performance and yields are nearly identical because the yields of government-backed debt tends to trade together.
Both SPAXX and FDRXX are government funds, which means that they invest in government securities. 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 government and Treasury repos) for tax purposes. Income from government repos (that SPAXX and FDRXX own) is subject to state income tax. Income from Treasury bonds is exempt from state income tax. Therefore, FDRXX and SPAXX may be a slightly better choice than a prime fund 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.
Investors allocating more than $1 million to SPAXX may want to consider the lower-cost “premium class” share class which is FZCXX.
Is SPAXX or FDRXX a Better Fund?
As mentioned above, the funds are nearly identical and I consider the two fund interchangeable. I would not spend any more time attempting to split hairs here because they are basically the same. Investors subject to state tax may want to invest in a Treasury only fund like FDLXX though. Investors in high federal tax brackets may want to explore muni money market funds.