Fidelity offers several “prime” money market mutual funds, including the Fidelity Money Market Fund Premium Shares (FZDXX) and the Fidelity Money Market Fund (SPRXX). Many investors ask about the differences between these two funds since they are two of the largest prime money market mutual funds in the market today. When comparing FZDXX vs SPRXX, it is clear which fund is best for most investors.
The Short Answer
FZDXX and SPRXX are two share classes of the exact same fund! There is no need to compare FZDXX vs SPRXX because the only difference is the minimum initial investment amount and the expense ratio. Investors who can make an initial purchase of $100,000 or more will get a higher yield with FZDXX.
FZDXX vs SPRXX Historical Performance
Since its inception, FZDXX has outperformed SPRXX by .12% on an annualized basis. This has compounded to a 1.07% cumulative difference over the past 8 years, which is relatively small. Currently the yield difference is about .12%, which is consistent with the historical performance difference.
Current Yields for SPRXX & FZDXX
The current 7 day yield is a standardized yield metric for money market mutual funds and the 7 day yields for both FZDXX and SPRXX can be found on the fund’s webpages. See here for FZDXX and here for SPRXX.
What rate is FZDXX & SPRXX paying?
The current interest rate for FZDXX, SPRXX, and other Fidelity money markets can be found on Fidelity’s money market page.
SPRXX & FZDXX Details
The expense ratio is .42% for the SPRXX investor shares and .30% for the FZDXX premium 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.
SPRXX has no minimum investment and investors can invest as little as one cent, while FZDXX has a minimum investment of $100,000. My observation is that investors can keep FZDXX even if they sell and their balance falls below $100,000. The $100,000 minimum seems to only apply to the initial purchase.
I have not checked every brokerage, but FZDXX and SPRXX is generally only available to clients of Fidelity.
Like most money market mutual funds, investors can sell FZDXX or SPRXX at any time.
SPRXX & FZDXX Risks
Hypothetically, an investor could lose money with FZDXX or SPRXX, 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 SPRXX or FZDXX though.
As of July 31, 2023, the fund had nearly $86 billion in net assets. This was composed of approximately $9 billion in the investor shares and $77 billion in premium shares.
IS SPRXX or FZDXX FDIC Insured?
No, neither SPRXX nor FZDXX are FDIC insured.
Holdings
The two funds are share classes of the same portfolio, so the holdings are identical. The largest holding is repurchase agreements (repos) at 67%, followed by commercial paper at 15%, and CDs at 13%, among other asset classes. The vast majority of the fund’s holdings have a maturity of less than one week (77%).
High Balances
Investors allocating more than $100,000 may want to consider the “premium” share class of the fund, whose symbol is FZDXX.
Tax Considerations
SPRXX and FZDXX are “prime” funds which means that it can invest in both government and non-government financial instruments. However, taxable investors may find better after-tax yields in government or municipal (muni) money market funds, both of which offer tax benefits that may improve investors’ after-tax yield.
Government and Treasury Money Market Funds
Most states have an income tax. However, interest from Treasuries is exempt from state tax. Therefore, investors in states with income tax may be better off with a Treasury money market fund (such as SNSXX or SUTXX) that only invests in Treasuries.
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.
Which is Best? FZDXX or SPRXX?
Overall, SPRXX is a good investment for many situations (and I have used it many times). Those investing more than $100,000 should generally go with FZDXX for the higher yield. Investors who are subject to high tax rates may want to consider other funds though.
