We Compare SPAXX vs FDRXX:
Fidelity Government Money Market Fund (SPAXX) vs Fidelity Government Cash Reserves (FDRXX).
Both of these funds aim to preserve capital and liquidity.
I'll break down each to help you decide which core position to choose.
Money Market Funds
Money market mutual funds restrict their investments to U.S. Treasury securities, repurchase agreements collateralized by U.S. Treasury securities, and other government securities.
SPAXX and FDRXX are both mutual funds owned by Fidelity.
Both funds are identical except for their expense ratios and net assets (NAV).
Investors that target financial independence through stable, high-yield investments may love these two, but considering these differences, choosing between the two may be challenging.
Let's find out the implication of these differences.
What Is SPAXX?
Created in 1990, Fidelity Government Money Market Fund (SPAXX) is among the global government money market funds.
Fidelity's SPAXX boasts $214 billion in total assets, making it one of the most widely held money market funds.
SPAXX is very similar to the American Century Capital Preservation Fund in its mission.
SPAXX aims to provide investors with the following:
- High-Yield Returns
- High Liquidity
- Preservation Of Capital
Typically, the fund is nearly 100% invested in cash or cash equivalents (short-term U.S. government securities or repurchase agreements collateralized by U.S. Treasury securities.
- Expense Ratio (Gross): 0.42%
- Expense Ratio (Net): 0.15%
- Dividend Yield: 1.95%
- One-Year Total Return: 2.25%
More so, the fund maintains a $1 net asset value (NAV) share price.
SPAXX expense ratio (net) is 0.15%.
SPAXX Performance & Returns
Top 10 Holdings (66.84% of Total Assets)
What is FDRXX?
Like SPAXX, Fidelity founded Fidelity Government Cash Reserves (FDRXX) with the same goal.
The fund seeks to achieve high returns with consistent liquidity and capital preservation.
FDRXX invests primarily in high-quality, short-term money market instruments and seeks to maintain a stable net asset value of $1 per share.
Investors typically use FDRXX as a short-term parking place for cash, intending to earn a small return while preserving the principal.
This fund can be a suitable option for investors looking for a low-risk investment with high liquidity, as the fund allows for easy access to cash when needed.
- Expense Ratio (Net): 0.27%
- Dividend Yield: 1.98%
- One-Year Total Return: 2.29%
Like SPAXX, FDRXX invests more than 80% of its assets in U.S. Treasury securities and repurchases agreements for U.S. Treasury securities.
Fidelity's FDRXX has an expense ratio of 0.27%.
FDRXX Performance & Returns
Top 10 Holdings
What Is FCASH?
FCASH is a balance of funds that Fidelity can pay you on demand.
Fidelity is not required to pay interest on FCASH.
Compared to SPAXX and FDRXX, which are money market funds, FCASH is not a money market fund.
Currently, FCASH pays 0.01%, but Fidelity is not required to pay interest on your FCASH balances.
SPAXX vs FDRXX
The main difference between SPAXX and FDRXX is their expense ratio. SPAXX has an expense ratio of 0.15%, while FDRXX has an expense ratio of 0.27%.
Here is a comparison between SPAXX and FDRXX:
FDRXX and SPAXX are mutual funds with similar 5-year returns (1.12% vs 1.15%).
SPAXX may invest in government securities with maturities of up to 397 days, while FDRXX is limited to securities with 60 days or less.
This means that SPAXX may hold securities with slightly longer maturities, which could impact the fund's overall risk profile and yield potential.
Another difference between these funds is their expense ratios.
The expense ratio for SPAXX is slightly lower at 0.15% compared to 0.27% with FDRXX, which means that investors may earn slightly higher returns with SPAXX.
Lastly, another big difference is SPAXX is available in retirement and non-retirement accounts, while FDRXX is only available in retirement accounts.
SPAXX vs FDRXX: Expense Ratio
A “good” expense ratio will be relative depending on whether the mutual fund and ETF are actively or passively managed.
Active funds tend to involve more rigorous processes, research, and trading; therefore, the cost of operation may be higher, which means a higher expense ratio.
A decent expense ratio for actively managed mutual funds may range from 0.04% to 1.0%, 0.40% for a domestic bond fund, and 1.0% for an international stock fund.
A passive fund will most likely attract minimal management cost and a reasonable expense ratio ranging from 0.05% to 0.20%.
FDRXX has an expense ratio of 0.27%
SPAXX has an expense ratio of 0.15%
Both SPAXX and FDRXX are passively managed funds.
From what a “good” expense ratio for a passively managed fund should be, FDRXX may be said to have a high expense ratio.
An expense ratio of 0.15% (for SPAXX) is above average but still meets the standard for a reasonable expense rate.
SPAXX vs FDRXX Net Asset Value (NAV)
Generally, it is the value of a fund's assets minus its liabilities.
However, the term (net asset rather than net worth) is often used in connection to mutual funds or ETFs.
This is because it measures the value of the assets/holdings in the fund.
In a mutual fund or ETF, the value of assets will be the value of the securities in the portfolio.
On the other hand, the value of liabilities will be the value of all of the fund's liabilities and expenses.
This includes operational fees, management expenses, audit fees, and salaries.
Investors consider the net asset because it shows the difference between what the entity owns and owes.
This helps determine the exact value of the fund.
A positive NAV may be an indication of good financial health.
If the fund has a negative NAV, the possibility that it will soon face serious financial difficulties is high.
SPAXX's Net Asset Value is $214 billion
FDRXX's Net Asset Value is $210 billion
These figures show that both funds are at an all-time high with high net asset values.
However, SPAXX beats FDRRXX with $4 billion more in net assets.
SPAXX vs FDRXX Winner: SPAXX
SPAXX and FDRXX are extremely similar. They are mutual funds with the same high income, liquidity, and preserved capital goals.
Their historical yield is also almost the same.
However, FDRXX has a higher expense ratio than SPAXX (0.27% vs 0.15%). The difference is significant.
SPAXX has more net assets ($214 billion) than FDRXX ($210 billion), a huge difference of $4 billion.
From this analysis, SPAXX wins the comparison.
It offers more liquidity at a lower cost compared to FDRXX.