FDLXX is the fund Fidelity investors move into when they care about state taxes. Unlike the default SPAXX, FDLXX holds Treasury-only paper with no repurchase agreements, so much more of its income qualifies for the state and local tax exemption. That makes it a genuinely close match for SGOV on the tax angle. Where the two split is cost: FDLXX charges 0.42%, SGOV charges 0.09%.
SGOV vs FDLXX at a glance
| SGOV | FDLXX | |
|---|---|---|
| Type | ETF (holds Treasury bills) | Treasury money market mutual fund |
| Issuer | BlackRock (iShares) | Fidelity |
| Expense ratio | 0.09% | 0.42% |
| Holdings | US Treasury bills maturing in 0 to 3 months | US Treasury securities only, with no repurchase agreements |
| State income tax | Nearly full. SGOV holds essentially only Treasuries, so almost all of its income qualifies for the state and local tax exemption. | High. FDLXX is built to hold Treasury-only paper, so a large share of its income qualifies for the state exemption, notably more than Fidelity's default SPAXX. |
| Default cash sweep? | No. An ETF you buy and hold anywhere. | No. FDLXX is a fund Fidelity investors move into deliberately, often specifically for the state-tax treatment. The default sweep is SPAXX. |
| Minimum | One share (fractional at many brokers) | No minimum |
| Where you can hold it | Any brokerage | Fidelity accounts |
Expense ratios are the funds' stated figures and are stable; 7-day yields move with the Fed and are not shown here. Check each issuer's page for the current yield before comparing.
On taxes, FDLXX is the closest money fund to SGOV
Most money market funds give up part or all of the state-tax exemption because they hold repos, agency debt, or corporate paper. FDLXX is deliberately built to avoid that: it holds Treasury securities only, no repurchase agreements, so a large share of its income is the kind of US government interest states exempt. For a Fidelity investor in a high-tax state, this is the whole reason FDLXX exists, and it is why FDLXX, not the default SPAXX, is the fair comparison to SGOV on tax treatment. The two land close, with SGOV's Treasury-bill-only portfolio still typically a hair ahead.
The fee is where they separate
FDLXX charges 0.42%, the same as SPAXX, while SGOV charges 0.09%. So even though FDLXX closes most of the tax gap that SPAXX leaves open, it does so at nearly five times SGOV's fee. That roughly 0.33% annual cost difference comes straight out of net yield, every year, and on a larger balance it adds up: about $82 a year per $25,000. FDLXX solves SPAXX's tax problem but not its cost problem.
Convenience still favors staying inside Fidelity
Like SPAXX, FDLXX is a Fidelity mutual fund: it transacts once a day at its set price and lives inside Fidelity, but it is not the automatic sweep, so you move cash into it on purpose. SGOV is an ETF you can hold at any broker and trade intraday. For a Fidelity loyalist who wants better tax treatment than SPAXX without leaving the money-fund format, FDLXX is the in-house answer; SGOV is the answer if the fee matters more than staying in a single fund type.
Nearly matched on tax, a 0.33% fee gap in SGOV's favor
FDLXX is the money market fund that comes closest to SGOV on the thing that makes SGOV attractive: the state-tax exemption, because it holds Treasury-only paper. The two are close enough on tax that the deciding factor becomes cost, where SGOV's 0.09% against FDLXX's 0.42% is a clear, durable gap. FDLXX's edge is format: a Fidelity investor who prefers a money fund gets most of SGOV's tax benefit without buying an ETF.
Which fits which situation
SGOV tends to fit
An investor who wants the strong Treasury state-tax treatment and the lowest fee, and does not mind holding an ETF or holding it outside Fidelity.
FDLXX tends to fit
A Fidelity investor who wants better state-tax treatment than the default SPAXX but prefers the money-fund format, and accepts the higher 0.42% fee for staying in it.
Cash, yields, and the tax math, weekly.
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Common questions
On state taxes they are close, because both hold Treasury-first portfolios. The clear difference is cost: FDLXX charges 0.42% and SGOV charges 0.09%, so SGOV keeps more of the yield. FDLXX's advantage is format and convenience for a Fidelity investor who prefers a money market fund over an ETF. Neither is universally better; this is educational information, not a recommendation.
Largely yes. FDLXX holds Treasury-only securities with no repurchase agreements, so a large share of its income qualifies for the state and local tax exemption, notably more than Fidelity's default SPAXX. SGOV, holding essentially only Treasury bills, is typically a touch higher still. Both are strong on this measure; confirm the exact percentage in each fund's tax documents and with your tax professional.
Both are Fidelity money market funds, but they hold different things. SPAXX is a government fund holding Treasuries plus repurchase agreements and agency debt, and it is the default cash sweep. FDLXX holds Treasury-only paper with no repos, which gives it a stronger state-tax exemption. Tax-aware Fidelity investors often move cash from the default SPAXX into FDLXX for that reason. Both charge 0.42%.
The main reasons are format and convenience. FDLXX is a money market fund that transacts once a day and stays inside Fidelity, which some investors find simpler than buying and managing an ETF. It delivers most of SGOV's state-tax benefit in that format. The cost is the higher 0.42% fee. This describes the trade-off; it is not advice to choose either one.
Their gross yields both track Treasury rates and are similar, and their state-tax treatment is close. The durable separator is the fee: SGOV's 0.09% versus FDLXX's 0.42% means SGOV typically keeps more net of costs. Exact yields move with the Fed and are not guaranteed; check current figures and your own tax situation before comparing.