If you hold cash at Fidelity, you probably already own SPAXX without choosing it: it is the default government money market fund that idle cash sweeps into automatically. SGOV is an iShares ETF holding Treasury bills that you have to buy deliberately. Both are low-risk places to hold cash, and both pay a yield that floats with the Fed. The durable differences are three: what each costs, how each is taxed, and how convenient each is to actually use.
SGOV vs SPAXX at a glance
| SGOV | SPAXX | |
|---|---|---|
| Type | ETF (holds Treasury bills) | Government 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 Treasuries, repurchase agreements, and government agency debt |
| State income tax | Nearly full. SGOV holds essentially only Treasuries, so almost all of its income qualifies for the state and local tax exemption. | Partial. Only the direct-Treasury share of income qualifies, and in high-tax states with a 50% threshold (like CA, CT, NY) a government fund holding repos can fall short of that bar in a given year. |
| Default cash sweep? | No. An ETF you buy and hold anywhere. | Yes. SPAXX is the default cash sweep in most Fidelity brokerage accounts, so idle cash sits there automatically. |
| 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.
The fee gap is the part that does not move
Yields on both funds rise and fall with the Fed, and on any given day they land close to each other before costs. Costs are where they separate, permanently. SPAXX charges 0.42%. SGOV charges 0.09%. That roughly one-third-of-a-percent difference comes straight out of what you keep, every year, regardless of where rates go. On $25,000 of cash, that is about $82 a year, for two funds doing nearly the same job.
The fee also explains a quirk people notice: a government money market fund's net yield often trails a T-bill ETF's simply because more is skimmed off the top before it reaches you. The gross holdings are similar; the fee is not.
The state tax difference favors SGOV, sometimes a lot
Interest from US Treasuries is exempt from state and local income tax. SGOV holds essentially only Treasuries, so nearly all of its income qualifies. SPAXX is a government fund that also holds repurchase agreements and agency debt, and the repo portion generally does not qualify for the state exemption. In several high-tax states (California, Connecticut, New York), a fund must hold at least 50% US government obligations at each quarter-end for any of it to pass through, and a government money market fund leaning on repos can miss that bar in a given year, which zeroes out the break entirely in those states. The full mechanic is in is SGOV exempt from state tax.
SPAXX wins on one thing: it is already there
Convenience is real and worth naming. SPAXX requires no action: cash sweeps in, earns, and is instantly available to trade with, all inside Fidelity. SGOV is a trade you place and a position you manage, it settles like any ETF, and selling it to free up cash takes the standard settlement time. For an emergency fund or money you touch often, that friction is the trade-off you are weighing against the fee and tax advantages.
Same job, a 0.33% fee gap, and a state-tax edge for SGOV
On the numbers that do not decay, SGOV holds two structural advantages: a 0.09% fee against SPAXX's 0.42%, and a cleaner state-tax profile because it holds only Treasuries. SPAXX's advantage is convenience: it is Fidelity's automatic default and needs no management. Neither is universally better; the comparison is lower cost and better tax treatment against zero-effort convenience.
Which fits which situation
SGOV tends to fit
An investor comfortable placing a trade who wants the lowest fee and the fullest state-tax exemption on a larger cash balance, and who does not need the money to sweep automatically.
SPAXX tends to fit
A Fidelity user who values cash being instantly available and automatic, holds a smaller balance where the fee gap is a few dollars, or lives in a no-income-tax state where the tax difference is moot.
Cash, yields, and the tax math, weekly.
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Common questions
They do the same job with different trade-offs, so neither is universally better. SGOV has a lower expense ratio (0.09% vs 0.42%) and a fuller state-tax exemption because it holds only Treasuries. SPAXX is Fidelity's automatic default sweep, so it needs no management and cash is instantly available. Which matters more depends on your balance size, your state, and how much you value convenience. This is educational information, not a recommendation.
SPAXX, the Fidelity Government Money Market Fund, has a stated expense ratio of 0.42%. That is roughly four to five times SGOV's 0.09%, and the difference comes directly out of your net yield every year. Fee figures can change; confirm the current number on Fidelity's fund page.
Only partially. SPAXX is a government money market fund that holds Treasuries plus repurchase agreements and agency debt. The direct-Treasury portion of its income can qualify for the state and local tax exemption, but the repo portion generally does not, and in states with a 50% government-obligations threshold (like California, New York, and Connecticut) the fund may not pass the exemption through at all in a given year. SGOV, holding essentially only Treasuries, qualifies far more fully. Confirm specifics with your tax professional.
Yes. SGOV is an ETF and trades commission-free at Fidelity like any other ETF. The difference is that SGOV is a position you buy and sell deliberately, while SPAXX is the automatic sweep that holds cash between trades. Some investors hold cash in SPAXX for spending flexibility and move longer-term cash into SGOV; that is a description of a common pattern, not advice.
Both track short-term rates set by the Fed, so their gross yields are usually close. After fees, SGOV's much lower expense ratio means it typically keeps more of that yield, and after state taxes the gap can widen further for investors in high-tax states. Exact yields change constantly; check each issuer's current 7-day yield before comparing, and remember money market yields are not guaranteed.