SWVXX, the Schwab Value Advantage Money Fund, is one of the most widely held money market funds because it tends to pay a little more than government funds. It does that by holding prime paper: commercial paper, CDs, and other short-term corporate and bank debt. SGOV holds only US Treasury bills. That single difference in what they own drives everything else: the yield, the credit profile, and the tax treatment.
SGOV vs SWVXX at a glance
| SGOV | SWVXX | |
|---|---|---|
| Type | ETF (holds Treasury bills) | Prime money market mutual fund |
| Issuer | BlackRock (iShares) | Charles Schwab |
| Expense ratio | 0.09% | 0.34% |
| Holdings | US Treasury bills maturing in 0 to 3 months | Commercial paper, certificates of deposit, and other short-term corporate and bank debt, with some government paper |
| State income tax | Nearly full. SGOV holds essentially only Treasuries, so almost all of its income qualifies for the state and local tax exemption. | Minimal to none. As a prime fund, SWVXX holds mostly corporate and bank debt, so little of its income is Treasury interest that qualifies for the state exemption. |
| Default cash sweep? | No. An ETF you buy and hold anywhere. | No. Schwab sweeps idle cash to a bank account by default, not to SWVXX. You buy SWVXX deliberately to earn a higher yield on cash. |
| Minimum | One share (fractional at many brokers) | No minimum |
| Where you can hold it | Any brokerage | Schwab 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.
Why SWVXX usually shows a higher gross yield
A prime fund lends to corporations and banks, which pay slightly more than the US Treasury does, so SWVXX's holdings earn a bit more before costs. That is the appeal, and it is real. It also means SWVXX carries a sliver of credit risk that a Treasury-only fund does not: prime funds hold assets that are extremely safe but not government-guaranteed. Both funds are designed to hold a stable value, but the source of the yield is different.
SWVXX's expense ratio is 0.34% against SGOV's 0.09%, so part of that higher gross yield is handed back in fees. The net comparison is closer than the gross one, and it moves with rates.
The state tax break goes to SGOV, decisively
This is the difference most SWVXX comparisons miss. Because SWVXX holds mostly corporate and bank debt rather than Treasuries, very little of its income qualifies for the state and local tax exemption. SGOV, holding essentially only Treasuries, has nearly all of its income qualify. For an investor in a high-tax state, that exemption can erase or reverse SWVXX's gross-yield edge on an after-tax basis. The math is in is SGOV exempt from state tax, and the broader tax picture is in how ETFs are taxed.
Neither is a default, so both are a choice
Unlike Fidelity's SPAXX, SWVXX is not Schwab's automatic sweep, Schwab moves idle cash to a bank account instead. So holding SWVXX is already a deliberate step, which puts it on more equal footing with the deliberate step of buying SGOV. The decision becomes purely about what you want the cash to own and how your state taxes it.
A gross-yield edge for SWVXX, a tax and cost edge for SGOV
SWVXX tends to show a higher gross yield because it holds corporate paper and takes a little credit risk to do it. SGOV holds only Treasuries, charges 0.09% against SWVXX's 0.34%, and keeps the full state-tax exemption. In a high-tax state, that exemption and the lower fee can close or overturn SWVXX's yield advantage after taxes. The comparison is a bit more yield-with-a-bit-more-risk against lower cost and better tax treatment.
Which fits which situation
SGOV tends to fit
An investor who wants government-only credit, the lowest fee, and the full state-tax exemption, particularly in a high-tax state where that exemption is worth the most.
SWVXX tends to fit
A Schwab investor who wants the highest available money-fund yield, is comfortable with a prime fund's small credit exposure, and lives where state tax is low or absent so the exemption gap does not matter.
Cash, yields, and the tax math, weekly.
The fee and tax mechanics behind pages like this one, in one clear email. No jargon, no stock picks.
Common questions
They own different things, so it depends on what you want. SWVXX is a prime fund that usually shows a higher gross yield by holding corporate and bank debt, at a 0.34% expense ratio. SGOV holds only Treasury bills at 0.09%, carries no corporate credit exposure, and keeps the full state-tax exemption. In a high-tax state, SGOV's tax treatment can overcome SWVXX's gross-yield edge after taxes. This is educational information, not a recommendation.
Largely not. SWVXX is a prime money market fund holding mostly corporate paper and CDs rather than Treasuries, so very little of its income is the kind of US government interest that states exempt. SGOV, holding essentially only Treasuries, qualifies far more fully. In a high-tax state this is a meaningful difference. Confirm the specifics with your tax professional.
A prime fund like SWVXX holds short-term corporate and bank debt (commercial paper, CDs), which pays a bit more but carries a sliver of credit risk and little state-tax benefit. A government fund holds Treasuries, repos, and agency debt. SGOV goes further and holds only Treasury bills, which is why it has no corporate credit exposure and the fullest state-tax exemption of the three.
A small amount more. Both are built to hold a stable value and both are very low risk. But SWVXX holds corporate and bank paper, which is not government-guaranteed, while SGOV holds only US Treasury bills. Money market funds are not FDIC insured and can, in rare stress events, lose value. The credit difference is modest but real.
It depends on your state. Before taxes, SWVXX often shows a slightly higher yield. After state taxes, SGOV's full Treasury exemption can close or reverse that gap for investors in high-tax states, while in no-income-tax states SWVXX's gross edge holds. Yields change constantly and are not guaranteed; check current figures and your own bracket.