SPAXX vs FZFXX vs FCASH: Fidelity Core Positions Compared

When comparing Fidelity core positions like SPAXX, FZFXX, and FCASH, it’s essential to understand their characteristics and the specific purpose they serve within your investment strategy.

Each of these options has distinct features that may make them more or less suitable for your needs. Here’s a comparison of SPAXX, FZFXX, and FCASH:

Core Position Type Yield
SPAXX 4.99%
FXFXX 4.99%
FCASH 2.72%

Fidelity Government Money Market Fund (SPAXX):

  • Type: Money Market Fund
  • Founded: 1990
  • Objective: SPAXX is designed to provide investors with safety and liquidity. It invests in high-quality, short-term U.S. government securities, making it an ultra-low-risk option.
  • Yield: Historically, the yield on money market funds is relatively low, as they prioritize capital preservation and liquidity over returns.
  • Liquidity: Very high liquidity, allowing you to access your funds easily and quickly.
  • Suitable For: SPAXX is an excellent choice for parking cash you may need to access in the short term or for maintaining a stable value within your portfolio. It’s not meant for long-term growth but offers a safe haven for your cash.

Fidelity Treasury Money Market Fund (FZFXX):

  • Type: Money Market Fund
  • Founded: 1983
  • Objective: FZFXX is another money market fund from Fidelity, but it invests primarily in U.S. Treasury securities. This makes it slightly lower in risk compared to a general money market fund like SPAXX.
  • Yield: Similar to SPAXX, it offers low yields due to its focus on safety and liquidity.
  • Liquidity: High liquidity, just like other money market funds.
  • Suitable For: FZFXX is suitable for investors seeking a slightly higher level of safety due to its focus on U.S. Treasury securities while still maintaining high liquidity.

Fidelity Government Cash Reserves (FCASH):

  • Type: Money Market Fund
  • Objective: FCASH is another money market fund from Fidelity. It aims to provide safety and liquidity while seeking to maintain a stable net asset value (NAV).
  • Yield: Comparable to SPAXX and FZFXX, it provides low yields but is designed for capital preservation and liquidity.
  • Liquidity: High liquidity, suitable for short-term cash needs.
  • Suitable For: FCASH is suitable for those who want safety and liquidity in their investments but are open to maintaining a stable NAV and don’t require higher yields. It’s similar to SPAXX but may have a slightly different mix of underlying assets.

What is the difference between SPAXX vs FZFXX?

  • The primary difference between SPAXX and FZFXX is the specific type of government securities they invest in. SPAXX includes a broader range of government-related debt instruments, while FZFXX focuses exclusively on U.S. Treasury securities. This difference can impact the level of risk and the specific securities held within each fund.
  • SPAXX might include non-Treasury government securities, which can introduce a slightly higher level of risk compared to FZFXX’s exclusive focus on Treasuries.
  • Both funds are designed for safety and liquidity, and their yields are generally quite similar.

Which Fidelity Core Position is the Most Tax Friendly?

Both SPAXX and FZFXX, Fidelity’s money market funds, are exempt from state and local income taxes due to their investments in government securities. Your choice between them should depend on factors like the specific government securities held, risk tolerance, and investment goals rather than their tax treatment. Remember that both funds are still subject to federal income tax. Consult a tax advisor for a comprehensive tax strategy.

Which Fidelity Core Position Is Best? My Choice is SPAXX

My default choice is SPAXX because it has a higher AUM. Other than that, I leave it as the default Fidelity core position.

In summary, all three Fidelity core positions – SPAXX, FZFXX, and FCASH – are money market funds designed for safety, liquidity, and capital preservation.

The key differences lie in their underlying assets, with SPAXX being focused on government securities, FZFXX on U.S. Treasuries, and FCASH offering a similar profile but potentially with some variations in asset allocation.

Your choice between these options should depend on your specific investment goals, risk tolerance, and the level of safety and liquidity you require.

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