SPRXX vs. SPAXX: A Comparative Analysis
SPRXX and SPAXX are Fidelity money market funds designed to generate income by investing in money market instruments.
This article will compare both funds to help you determine which is best for you.
SPRXX vs. SPAXX: Overview
SPRXX, short for Fidelity Prime Money Market Fund, aims for a high level of current income with priorities centered around capital preservation and liquidity. Unlike its counterpart, SPRXX is allowed to invest in a wider array of money market securities, including some from outside the US.
On the other hand, SPAXX, or Fidelity Government Money Market Fund, seeks a high-income level similar to SPRXX. However, it achieves these goals primarily through investment in U.S. government securities and repurchase agreements. Essentially, it draws a safer line when it comes to the types of investments it ventures into.
Expense Ratio Comparison
The lower the expense ratio, the less it costs investors to hold the fund, directly leading to higher returns.
SPRXX and SPAXX both have an expense ratio of 0.42%, making it not a factor to consider when comparing the two funds.
Dividend Yield Comparison
Next up, we tackle the dividend yields. As interest rates increase, so will the dividend yield of these funds and vice versa.
SPAXX pays a slightly lower dividend yield than SPRXX since it only invests in government securities.
Holdings Comparison
SPRXX’s portfolio includes a wide variety of money market securities, primarily from the financial services sector, both domestic and foreign. This approach allows SPRXX to capitalize on global economic trends while achieving a diversified portfolio.
SPAXX, in contrast, limits its exposure to U.S. government securities and repurchase agreements. As a result, SPAXX’s holdings exhibit a lower risk level, making the fund more resilient during volatile market conditions but could limit its dividend yield potential.
Performance Comparison
Both funds provide similar returns, with SPAXX generating a bit less since it only invests in safer government securities.
Additionally, the performance of these funds highly depends on the interest rates and how the Federal Reserve affects them.
Neither of these funds will make you life-changing money, as they are basically cash equivalents, but they are much better than holding cash and not generating income.
Which is Better For You?
Ultimately, the decision between SPRXX and SPAXX rests in your hands.
Both will provide you with nearly the same returns, but SPAXX is technically the safer option.
In any case, both funds can prove to be sound investments for those wanting to park cash in a safe and liquid asset. Remember, investing isn’t one-size-fits-all, and the best choice will always be the one that aligns with your personal investment scenario.
If you want to learn more about the stock market, you can join the HaiKhuu Trading Community.
HaiKhuu offers live trading calls, daily morning reports, and an awesome community of like-minded traders to learn from.
FAQs: SPRXX vs. SPAXX
Is SPAXX or SPRXX better?
If you favor investments highly concentrated in government securities with minimal risk, then SPAXX may come out on top. On the other hand, if dipping into a broader spectrum of eligible money market investments seems more appealing, SPRXX should be your go-to fund.
