If you have a Fidelity brokerage or cash management account, you’ve almost certainly seen two names pop up as the default sweep option: SPAXX and FZFXX. Both are Fidelity money market funds. Both are designed to keep your idle cash working. But they’re not identical — and depending on your account type and tax situation, one may be meaningfully better for you than the other.
- SPAXX (Fidelity Government Money Market) invests primarily in U.S. government securities and repos — lower risk, widely used as a default sweep fund.
- FZFXX (Fidelity Treasury Money Market) is even more conservatively positioned, investing exclusively in U.S. Treasury securities and repos — potentially better tax efficiency in high-tax states.
- Current yields on both funds are similar, typically within a few basis points; SPAXX has sometimes edged ahead slightly.
- For most taxable accounts, FZFXX may offer a tax advantage if you’re in a high-income state; SPAXX is fine for retirement accounts where state tax doesn’t matter.
Bottom line: SPAXX and FZFXX are both excellent, low-risk options for idle cash. The right choice comes down to your account type and whether your state taxes Treasury interest — not a dramatic performance difference.
What Is SPAXX?
Fidelity Government Money Market Fund (SPAXX) is one of Fidelity’s most popular cash sweep vehicles. It invests primarily in U.S. government securities — including Treasury bills, government agency securities, and repurchase agreements collateralized by government securities.
Key facts about SPAXX:
- Ticker: SPAXX
- Category: Government Money Market Fund
- Expense ratio: 0.42%
- Minimum investment: $0 (as a sweep vehicle)
- 7-day yield: Approximately 4.0–4.5% (varies with Fed policy)
- NAV: Stable $1.00
SPAXX is the default sweep fund for most standard Fidelity brokerage accounts. That means idle cash automatically flows here when you’re not invested. It’s government-backed, low-risk, and liquid — you can withdraw or invest it same day.
What Is FZFXX?
Fidelity Treasury Money Market Fund (FZFXX) takes a slightly more conservative approach. It invests exclusively in U.S. Treasury securities and repos backed by Treasuries — meaning no agency securities like Fannie Mae or Freddie Mac paper.
Key facts about FZFXX:
- Ticker: FZFXX
- Category: Treasury Money Market Fund
- Expense ratio: 0.42%
- Minimum investment: $0 (as a sweep vehicle; may require manual selection)
- 7-day yield: Approximately 3.9–4.4% (typically a few basis points below SPAXX)
- NAV: Stable $1.00
Because FZFXX holds only Treasuries, its income is exempt from state and local income taxes in most states. SPAXX holds a mix of government securities, and only the portion attributable to Treasuries receives this exemption — typically 60–80% of income, depending on the year.
Yield Comparison: SPAXX vs FZFXX
Both funds move in lockstep with the federal funds rate. When the Fed raises rates, yields rise; when it cuts, yields fall. As of early 2026, both funds yield in the 4.0–4.5% range — a far cry from the near-zero yields seen in 2020–2021.
Historically, SPAXX has yielded a few basis points more than FZFXX. This makes sense: SPAXX can hold slightly higher-yielding government agency securities, while FZFXX sticks to pure Treasuries. The gap is usually small — often under 10 basis points — but can widen or close depending on market conditions.
On $50,000 in idle cash, a 5 basis point difference equals $25 per year. Not the deciding factor.
The Tax Angle: Where FZFXX Can Win
Here’s where the comparison gets more nuanced. U.S. Treasury interest is exempt from state and local income taxes under federal law. Government agency interest (like Fannie Mae bonds) is not.
SPAXX holds a blend of Treasuries and agency securities. Typically, 60–80% of SPAXX’s annual income qualifies for state/local tax exemption. FZFXX holds only Treasuries, so effectively 100% of its income is state/local tax-exempt.
If you live in a high-tax state (California at 13.3%, New York at 10.9%, Oregon at 9.9%), this difference matters:
- On $100,000 at 4.2% yield = $4,200 annual income
- SPAXX (75% exempt): $1,050 taxable at state level
- FZFXX (100% exempt): $0 taxable at state level
- In California, that’s $139 in state tax savings — enough to make FZFXX the better after-tax choice despite a marginally lower gross yield
In low-tax or no-income-tax states (Florida, Texas, Nevada, etc.), this distinction disappears entirely. Pick whichever yields more.
Which Account Should Use Which Fund?
Taxable Brokerage Accounts (High-Tax States)
Favor FZFXX. The state tax exemption on 100% of income often more than compensates for the slightly lower gross yield. Run the math based on your state tax rate and the current yield differential.
Taxable Brokerage Accounts (No State Income Tax)
Either fund is fine. Lean toward SPAXX for its marginally higher typical yield.
Roth IRA or Traditional IRA
State tax exemption is irrelevant in tax-advantaged accounts. Choose SPAXX for the slightly higher gross yield — the tax angle doesn’t apply here.
401(k) accounts
These are usually limited to options your plan offers — you may not have a choice between SPAXX and FZFXX. Check your plan’s lineup.
Risk Comparison
Both funds are extremely low risk. They maintain a stable $1.00 NAV and invest only in U.S. government-backed instruments. Neither has ever “broken the buck” (dropped below $1.00 NAV). If the U.S. government defaults, both funds have problems — but so does everything else in your portfolio.
FZFXX is technically marginally safer because it holds only direct Treasury obligations rather than agency securities. In practice, this distinction is theoretical for most investors.
The Verdict
For most investors, the choice between SPAXX and FZFXX is not going to make or break your financial plan. But if you want to optimize:
- High state income tax + taxable account? Choose FZFXX.
- No state income tax or retirement account? Choose SPAXX.
- Don’t want to think about it? Either is fine — stick with the default SPAXX.
Both are far superior to leaving cash in a traditional bank savings account at 0.01% APY. If you have idle cash sitting in either fund, you’re already making a smart, informed decision.
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