Governmentmoney market mutual fundsinclude funds that only invest in the following assets:
- U.S. Treasury securities
- Repurchase agreements collateralized by U.S. Treasury securities
- Other types of government securities
Government money market funds attract conservative investors who gravitate to stable, highly liquid vehicles that carry minimal credit risk. Consequently, nearly all mutual fund providers offer some version of these funds. The following three well-known examples dominate the investment landscape and have helped popularize this investment category.
Key Takeaways
- Governmentmoney market mutual fundsinclude funds that only invest in U.S. Treasury securities and repurchase agreements collateralized by U.S. Treasury securities.
- Government money market funds attract conservative investors because they are stable, highly liquid vehicles with minimal credit risk.
- Three top money market mutual funds are the Fidelity Government Money Market Fund (SPAXX), the Vanguard Federal Money Market Fund (VMFXX), and the American Century Capital Preservation Fund (CPFXX).
Fidelity Government Money Market Fund (SPAXX)
Fidelity launched the Fidelity Government Money Market Fund (SPAXX) in 1990, and boasts $267.99 billion in total net assets as of May 2023, making it one of the most widely held funds in this category. Similar to the American Century Capital Preservation Fund, SPAXX strives to usher in high-yield returns, with high liquidity, and an emphasis on capital preservation.
The fund is typically 100% or more invested in cash or cash equivalents in the form of short-term U.S. government securities orrepurchase agreementsthat are fully collateralized by cash or such securities. Some U.S. government securities are issued by duly authorized government agencies but are not directly issued nor guaranteed by the U.S. Treasury.
In selecting the fund's investments, the fund’s management team focuses on maintaining a stable $1 net asset value (NAV) share price. The weighted average maturity of the portfolio holdings is 24 days.
As of May 2023, the fund’s top holdings included the following:
- U.S. Government Repurchase Agreements (64.7%)
- Agency Floating-Rate Securities (24.05%)
- Agency Fixed-Rate Securities (7.94%)
- U.S. Treasury Coupons (3.32%)
- U.S. Treasury Bills (1.94%)
The fund has an annual expense ratio of 0.42% and a dividend yield of 4.75%. Its one-year total return is 3.10%. This fund is well suited for investors who prefer its broad range of investments.
Vanguard Federal Money Market Fund (VMFXX)
Vanguard launched the Vanguard Federal Money Market Fund (VMFXX) in 1981. Total AUM as of May 2023 is $247.8 billion. This fund has the same investment aims of providingcapital preservationand current income through investing in high-quality, short-term U.S. government securities.
Vanguard bills this fund as one of the most conservative offerings in this category, making it an ideal choice for conservative seeking risk avoidance and capital preservation.
As of May 2023, the fund’s top allocation was to Repurchase Agreements at 59.6%, followed by U.S. Government Obligations at 38.8%, and U.S. Treasury Bills at 1.7%. The average maturity of the portfolio holdings was 14 days. The expense ratio for the Vanguard Federal Money Market Fund is 0.11%; the dividend yield is 5.04%, and the one-year total return is 3.43%.
American Century Capital Preservation Fund (CPFXX)
The American Century Investments Capital Preservation Fund Investor Class(CPFXX) was launched by American Century in 1972, and has over $2.27 billion in totalassets under management (AUM), as of May 2023. The fund is primarily known for maximizing safety and liquidity. The fund aims to achieve the highest possible yield return consistent with its asset mix, which consists of Treasury bills, bonds, and notes. The fund ordinarily invests solely in short-term U.S. Treasury money market securities. The weighted average maturity of its portfolio holdings is 39.57 days.
The gross annual expense ratio for the Capital Preservation Fund was 0.48% as of May 2023. Its one-year total return as of May 2023 was 2.89%. This mutual fund is appropriate for investors whose current investment goals align with those of the strategy and who seek a pure-play government money market fund that invests exclusively in U.S. Treasury securities.
Special Considerations
Money market mutual funds can be perfect vehicles for risk-averse investors. Barring a financial crisis, there is little risk associated with these vehicles. Furthermore, some money market accounts and funds come with withdrawal or check writing features, making them a viable alternative to standard checking and savings accounts for some investors.
FAQs
As a government money market fund, SPAXX's portfolio consists mostly of U.S. government repurchase agreements, agency-issued floating rate and fixed-rate securities with a short maturity and high credit quality.
What is SPAXX Fidelity government money market? ›
Fidelity Government Money Market Fund (SPAXX)
The fund is typically 100% or more invested in cash or cash equivalents in the form of short-term U.S. government securities or repurchase agreements that are fully collateralized by cash or such securities.
Is Fidelity SPAXX a money market account? ›
SPAXX - Fidelity ® Government Money Market Fund.
What is the rate of return on SPAXX? ›
Lipper Ranking & Performance
| Fund Return | Category 1 |
|---|
| YTD | 2.77% | 2.64% |
| 1yr | 3.86% | 3.69% |
| 3yr 2 | 1.36% | 1.29% |
| 5yr 2 | 1.37% | 1.26% |
1 more rowFidelity Government Money Market Fund (SPAXX), a taxable money market mutual fund investing in U.S. Government Agency and Treasury debt, and related repurchase agreements. Intended for investors seeking as high a level of current income as is consistent with the preservation of capital and liquidity.
Which is better fidelity government money market or Treasury money market? ›
Fidelity U. S. Treasury money market fund is the safest of the lot while Fidelity U. S. Government Reserves and Fidelity Government Money Market Fund are a close second. Money market funds investing in commercial paper or debt issued by municipalities tend to carry a bit more risk.
Is Fidelity government money market safe? ›
Stability & safety
While not insured by the FDIC, the funds are required by federal regulations to invest in short-maturity, low-risk investments, making them less prone to market fluctuations than many other types of investments.
Is it safe to leave money in SPAXX? ›
Money market funds like SPAXX are generally considered to be low-risk investments, as they are typically invested in short-term, high-quality debt instruments such as Treasury bills and certificates of deposit. However, there is still a risk of loss associated with these funds.
Is my money safe in Fidelity SPAXX? ›
SPAXX – Fidelity Government Money Market Fund
The tradeoff, of course, is that a money market fund is not insured. SPAXX is specifically collateralized by government securities, and would thus be considered safer than a broader money market fund that includes corporate debt.
How much dividend does SPAXX pay? ›
Dividend Payout History
| Amount | Adj. Amount | Record Date |
|---|
| 0.0015 | 0.0015 | 8/31/2022 |
| 0.0010 | 0.0010 | 7/31/2022 |
| 0.0006 | 0.0006 | 6/30/2022 |
| 0.0003 | 0.0003 | 5/31/2022 |
73 more rowsThere is no direct way to lose money in a money market account. However, it is possible to lose money indirectly. For example, if the interest rate you receive on your account balance can no longer keep up with any penalty fees you may be assessed, the value of the account can fall below the initial deposit.
How is SPAXX taxed? ›
Distributions you receive from the fund are subject to federal income tax and generally will be taxed as ordinary income or capital gains, and may also be subject to state or local taxes, unless you are investing through a tax-advantaged retirement account (in which case you may be taxed later, upon withdrawal of your ...
What is the difference between SPAXX and Fdrxx? ›
SPAXX is available in Non-Retirement Brokerage Accounts (other than Fidelity Cash Management Accounts) and Retirement Accounts, such as IRAs. FDRXX is available in Retirement Accounts. While these funds have some similar characteristics, there are differences in their asset composition and underlying structure.
What stock symbol is SPAXX? ›
Fidelity Government Money Market Fund SPAXX:NASDAQ
There is no recent news for this security.
Is it safe to keep money in SPAXX? ›
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Is Schwab Prime money market fund safe? ›
Accounts of Charles Schwab & Co., Inc. are insured by SIPC for securities and cash in the event of broker-dealer failure. The Schwab Money Funds are protected as securities by SIPC. Below is a link to information that can be shared with the client at schwab.com.
Is Fidelity Government Money Market Fund safe? ›
Stability & safety
While not insured by the FDIC, the funds are required by federal regulations to invest in short-maturity, low-risk investments, making them less prone to market fluctuations than many other types of investments.
What is the safest type of money market fund? ›
Types of Money Market Funds
Government funds must invest 95.5% of their assets in government-issued securities and consequently are extremely safe. Municipal money market funds invest in municipal bonds issued by municipalities and municipal agencies, which pay interest exempt from federal income tax.
