SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

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hmw
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SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by hmw »

I am trying to find out if SGOV has a slightly higher yield than Fido CMA MM funds.

I see that the 7-day yield for FZFXX as of 1/31/25 is 4.02%. I can't find the 7-day yield for SGOV.

The one year return seems to be a bit higher for SGOV.

So, which fund will have higher yield going forward?

Thanks
BV3273
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by BV3273 »

I've been doing research on this since reading some of the horror stories about Vanguard, which is where I wanted to hold VUSXX.

SGOV is not a MM, so there can be drift in the NAV - Price of the ETF.

Yield of SGOV will most likely be higher than FZFXX & SPAXX.

Unfortunately, Fidelity just doesn't have the best option for a MM.
Kbg
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by Kbg »

A 7-day yield doesn't make much sense to me for this fund. It's not a MMF. It's a 0-3 mo treasury bill fund. And in this case, the standard 30 day SEC yield is not a bad metric to use.
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sycamore
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by sycamore »

hmw wrote: Sun Feb 02, 2025 10:48 am So, which fund will have higher yield going forward?
You mean going forward forever or some smaller period of time like the next X years?

In general I think the answer is unknown - subject to market forces beyond our ken.
Ferdinand2014
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by Ferdinand2014 »

7 day yield for FZFXX is 4.02
30 day SEC yield for SGOV is 4.28% per ishares
Could not find 7 day yield.
As weighted average maturity of both are nearly the same at 34 (per Fidelity) and 40 days (per ishares), it would seem 7 day and 30 day yields will be very close.


My take is SGOV will yield more by essentially the difference in expense ratio.
Money market vs ETF benefits and détractions would be another deciding factor.
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Geologist
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by Geologist »

There certainly won't be an official 7-day (SEC) yield for SGOV because it is a bond fund. Bond funds have 30 day SEC yields. Only money market funds have 7 day SEC yields.
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indexfundfan
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by indexfundfan »

You can get the 30-day yield of Fidelity MMFs

https://institutional.fidelity.com/app/ ... true&pos=T
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friedplantain
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by friedplantain »

SGOV does not report a 7-day SEC yield as it does not meet the statutory definition of a money market fund (as defined under §270.2a-7 https://www.law.cornell.edu/cfr/text/17/270.2a-7). Instead, a 30-day SEC yield is reported as is a convention for bond funds.

While the 7-day SEC yield and 30-day SEC yield metrics are not quite apples to apples in comparison, they are similar metrics that attempt to annualize a fund's recent short term yield to allow for comparison with other funds. As an alternative to the 30-day SEC yield, you can also approximate the present annualized yield offered by SGOV by finding the average yield to maturity (presently 4.32% per https://www.ishares.com/us/products/314 ... y-bond-etf) and subtracting the expense ratio of the fund (presently 0.09%) to calculate the approximate annualized yield to maturity net of expenses (4.32% - 0.09% = 4.23%). Remember that the 7-day SEC yield and 30-day SEC yield metrics are net of expenses as well.

As a byproduct of the above calculation, you should also note that SGOV has a lower expense ratio than FZFXX (presently 0.42% per https://fundresearch.fidelity.com/mutua ... /316341304) that is mentioned in your post, or generally any other money market fund offered by Fidelity. Thus, in the long term, it may offer a higher yield net of expenses than similar ultra short duration Treasury bond funds with higher expense ratios (note that FZFXX has a weighted average maturity of 34 days or 0.09 years, similar to SGOV).

While SGOV is not a money market fund by the statutory definition, it is functionally a money market fund in that its holdings consist of 0-3 month Treasury Bills, virtually free of credit risk, and has a very short duration (presently 0.10 years), suggesting that interest rate risk is very low. Notably, because it is an exchange traded fund, it has a floating NAV unlike retail and government money market funds which may offer a stable or fixed NAV (note that institutional money market funds are required to have floating NAVs). Because of the very short duration and negligible credit risk, the floating NAV should nonetheless approximate a stable or fixed NAV, though not guaranteed.

Alternatives to SGOV you might consider include TFLO, BOXX, and the forthcoming VBIL:
  • TFLO holds a basket of 8 Treasury floating rate notes which adjust the floating portion of their yield to the 3-month Treasury auction yield every Monday, thus offering an even shorter duration than SGOV (presently 0.01 years per https://www.ishares.com/us/products/260 ... e-bond-etf), with negligible interest rate risk as a consequence. With the negligible credit risk of the Treasury FRNs and negligible interest rate risk, the floating NAV theoretically should be very stable.
  • BOXX is a unique ETF offering a yield derived from long box spreads and the potential advantage of tax deferral by minimizing distributions using a strategy of accruing capital losses within the fund to offset capital gains generated by the long box spreads, by utilizing "heartbeat" trades conducted with the fund's authorized participants. Potential distributions should be taxed as Section 1256 contracts (60% LCTG and 40% STCG). However, the duration of this fund is a bit longer (presently 52 days or 0.14 years per https://funds.alphaarchitect.com/boxetf/), the expense ratio is a bit higher (presently 0.1949% after fee waivers), and some concerns have been raised that the fund's tax strategy may not stand up to IRS scrutiny in the long term.
Last edited by friedplantain on Sun Feb 02, 2025 12:58 pm, edited 1 time in total.
moshe
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by moshe »

You may also want to consider XHLF, BondBloxx Bloomberg Six Month Target Duration US Treasury ETF with a lower ER than most MMs.
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Kbg
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by Kbg »

moshe wrote: Sun Feb 02, 2025 12:56 pm You may also want to consider XHLF, BondBloxx Bloomberg Six Month Target Duration US Treasury ETF with a lower ER than most MMs.
I'm a holder of XHLF. I was surprised to find out SGOV has outperformed XHLF with a tad more volatility as I was going to recommend it as well. I think either are great funds and look forward to VBIL's arrival.
Eno Deb
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by Eno Deb »

hmw wrote: Sun Feb 02, 2025 10:48 am I am trying to find out if SGOV has a slightly higher yield than Fido CMA MM funds.

I see that the 7-day yield for FZFXX as of 1/31/25 is 4.02%. I can't find the 7-day yield for SGOV.

The one year return seems to be a bit higher for SGOV.

So, which fund will have higher yield going forward?
As was already mentioned, you can look up the 30-day yield of the Fidelity funds (currently for FZFXX it's also 4.02%). Also, depending on your state you may get a tax advantage (SGOV is almost fully state tax exempt while FZFXX/SPAXX are not because they use a lot of repos).
mroe800
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by mroe800 »

Eno Deb wrote: Sun Feb 02, 2025 7:19 pm Also, depending on your state you may get a tax advantage (SGOV is almost fully state tax exempt while FZFXX/SPAXX are not because they use a lot of repos).
I use FDLXX in tandem with SGOV for this reason.
SP000
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by SP000 »

missed also :: USFR and CLIP
bog007
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by bog007 »

wmpxx always has great rate

https://moneymarket.fun/
Don’t let anyone else ruin your portfolio. It’s your portfolio. Ruin it yourself!!!
bogling
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Re: SGOV yield vs Fidelity cash management MM funds (FZFXX, SPAXX)

Post by bogling »

If held in non-taxable, higher pre-tax yield wins but if have state tax and holding in taxable account MMOptimizer can compare funds' after tax yield due to portion of state tax exemption. In that case, with about 10% state tax, for MMFs, VUSXX and FRSXX rise to top .

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