Fidelity SPAXX (FSPSX) is a money market fund that pays daily interest on balances held in eligible Fidelity brokerage accounts. As of June 2024, it offers a 5.15% annual percentage yield (APY), paid daily and compounded monthly.
SPAXX is designed for investors seeking capital preservation and liquidity while earning competitive returns. It invests primarily in high-quality short-term debt instruments such as U.S. Treasury bills, repurchase agreements, and commercial paper issued by top-rated institutions. These holdings are subject to strict credit quality standards, limiting exposure to lower-rated securities.
The fund's interest payments are automatic and reinvested unless the investor opts out. Daily interest accrual begins the moment funds are deposited into a qualifying Fidelity account. This makes SPAXX ideal for parking cash between investments or covering upcoming expenses without sacrificing yield.
Interest on Fidelity SPAXX is calculated daily based on the average daily balance and the current yield. The rate adjusts periodically based on changes in the federal funds rate and market conditions. For example, during the Federal Reserve's rate hikes in 2022-2023, SPAXX's yield rose from under 1% to over 5% by mid-2024.
Payments are credited to the account each business day. The interest earned is reported annually on Form 1099-INT, which is required for tax filing. Unlike savings accounts, SPAXX does not offer a fixed rate-it fluctuates with market rates, though it remains stable due to conservative underlying assets.
For example, a $10,000 balance in SPAXX at 5.15% APY earns approximately $515 in interest over 12 months. That's $42.92 per month, or about $1.43 per day. The actual amount varies slightly due to daily compounding and fluctuations in the yield.
To earn interest on SPAXX, you must hold the fund in a Fidelity Individual Retirement Account (IRA), taxable brokerage account, or Fidelity 401(k) plan. Accounts opened through Fidelity's online platform qualify automatically. There is no minimum balance requirement to start earning interest.
However, the fund is not available in Fidelity's Cash Management Account (CMA) or certain legacy retirement plans. Investors using Fidelity's automated investing tools (like Goal-Based Investing) may have SPAXX included in their portfolio allocation if they select a conservative or moderate risk profile.
As of May 2024, Fidelity reported that over 6.2 million accounts held SPAXX, with an average balance of $18,400. The fund had $142 billion in assets under management, making it one of the largest retail money market funds in the U.S.
SPAXX differs from other Fidelity funds in both structure and purpose. Unlike equity funds such as Fidelity Contrafund (FCNTX), which aim for long-term growth and carry market risk, SPAXX prioritizes principal safety and liquidity.
Compared to Fidelity's other money market options, SPAXX is the most widely accessible. Fidelity Government Portfolio (FGPFX) and Fidelity Treasury Portfolio (FTTPX) are similar but restricted to specific account types or institutional investors. SPAXX is available to retail investors with standard brokerage access.
| Fund | Target Investor | Current APY (June 2024) | Minimum Balance | Investment Focus |
|---|---|---|---|---|
| Fidelity SPAXX (FSPSX) | Retail investors | 5.15% | $0 | Short-term government and corporate debt |
| Fidelity Government Portfolio (FGPFX) | Institutional, high-net-worth | 5.05% | $1 million | U.S. Treasuries only |
| Fidelity Treasury Portfolio (FTTPX) | High-net-worth, retirement plans | 5.00% | $100,000 | U.S. government obligations |
A common misconception is that SPAXX guarantees a fixed return. It does not. While the fund maintains a stable net asset value (NAV) of $1.00 per share, the yield fluctuates. In early 2022, the yield dropped below 0.1% during a period of low Fed rates. By mid-2024, it had climbed above 5%, reflecting rising benchmark rates.
Some investors assume SPAXX is a savings account. It is not. While both offer interest and liquidity, SPAXX is a mutual fund regulated by the SEC under the Investment Company Act of 1940. This means it is not FDIC-insured. However, the fund's holdings are diversified and highly rated, reducing the risk of loss of principal.
Another error is confusing SPAXX with Fidelity's margin interest rate. SPAXX earns interest for the investor. Margin interest, charged on borrowed funds, is a cost. For example, if you borrow $10,000 on margin, you pay interest at the current rate-currently around 8.5% on Fidelity's platform. This is separate from SPAXX earnings.
I once monitored a client's account where $50,000 was moved from a traditional savings account into SPAXX. Over six months, the interest earned totaled $1,320 compared to $175 in the savings account. The difference came from SPAXX's higher yield and daily compounding. The client later used the accrued interest to fund a vacation, illustrating how small balances can grow meaningfully with the right vehicle.
Fidelity SPAXX does pay interest. It is a liquid, low-risk option for investors who want to earn more than a traditional savings account while preserving capital. The fund's yield is competitive and responsive to macroeconomic shifts. Always review the prospectus and current yield before allocating funds.