When I began managing my own investments, I overlooked money market funds. I thought they were boring and only for retirees. But after watching bank savings accounts earn less than 1% while inflation ate away at my cash, I realized something: money market mutual funds offer higher yields with low risk. They’re not growth machines—but they’re excellent for parking cash without letting it sleep.
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What Is a Money Market Mutual Fund?
A money market mutual fund is a type of mutual fund that invests in short-term, high-quality debt. Think U.S. Treasury bills, repurchase agreements, and commercial paper. These funds aim to preserve your capital and pay modest interest.
Unlike money market deposit accounts (offered by banks), money market mutual funds are investments—not insured by the FDIC. Still, they’re regulated under Rule 2a-7 of the Investment Company Act of 1940, which limits risk.
I use these funds as a cash management tool. I move idle money into them to earn yield while keeping it liquid for emergencies or short-term goals.
Why Interest Rates Matter Right Now
As of 2025, the Federal Reserve’s benchmark interest rate remains elevated. That’s good news for savers. While bank accounts still pay dismal rates, money market mutual funds pass along much of that Fed rate to investors.
If a fund holds assets yielding 5.30%, and its expense ratio is 0.30%, your net yield is:
Net\ Yield = 5.30% - 0.30% = 5.00%That’s $500 annually on a $10,000 investment—while your savings account might pay $100 or less.
Quick Comparison Table
| Fund Name | Ticker | 7-Day SEC Yield* | Expense Ratio | Minimum Investment | Type |
|---|---|---|---|---|---|
| Vanguard Federal Money Market | VMFXX | 5.27% | 0.11% | $3,000 | Government |
| Fidelity Money Market Fund | SPRXX | 5.25% | 0.42% | $0 | Prime Retail |
| Schwab Value Advantage Money Fund | SWVXX | 5.24% | 0.34% | $1 | Prime Retail |
| Vanguard Treasury Money Market | VUSXX | 5.22% | 0.09% | $3,000 | Treasury |
| Fidelity Treasury Only Money Market | FDLXX | 5.21% | 0.43% | $0 | Treasury |
| T. Rowe Price U.S. Treasury Money Fund | PRTXX | 5.19% | 0.33% | $2,500 | Treasury |
| Federated Hermes Government Obligations | GOFXX | 5.18% | 0.45% | $1,500 | Government |
| American Century Capital Pres. Fund | CPFXX | 5.16% | 0.50% | $1,000 | Government |
| BlackRock Liquidity FedFund | TFFXX | 5.15% | 0.18% | $1,000 | Government |
| Northern U.S. Government Select | NOGXX | 5.12% | 0.25% | $2,500 | Government |
*7-day SEC yield is a standardized measure that reflects what you would earn annually if the current rate persisted.
1. Vanguard Federal Money Market Fund (VMFXX)
I use VMFXX as a default cash sweep in my Vanguard account. It’s conservative and pays well.
- Yield: 5.27%
- Minimum: $3,000
- Expense Ratio: 0.11%
- Why I Like It: Low risk, good yield, backed by government securities.
It invests in U.S. government obligations and repurchase agreements. For cash that might be needed in 1–6 months, I find it ideal.
2. Fidelity Money Market Fund (SPRXX)
SPRXX is one of the best choices if you’re looking for zero minimums and a high yield.
- Yield: 5.25%
- Minimum: $0
- Expense Ratio: 0.42%
- Why I Like It: Accessible to everyone. It invests in high-grade corporate and bank obligations.
Because it’s a prime money fund, it doesn’t restrict itself to just government securities. That gives it a bit more yield—but also slightly more risk.
3. Schwab Value Advantage Money Fund (SWVXX)
SWVXX holds certificates of deposit, commercial paper, and repurchase agreements.
- Yield: 5.24%
- Minimum: $1
- Expense Ratio: 0.34%
- Why I Like It: Easy to use if I have a Schwab brokerage account. It automatically sweeps idle cash into this fund.
4. Vanguard Treasury Money Market Fund (VUSXX)
For state income tax efficiency, I sometimes use VUSXX in my taxable accounts.
- Yield: 5.22%
- Minimum: $3,000
- Expense Ratio: 0.09%
- Why I Like It: Invests in U.S. Treasury securities only. That means it’s exempt from state and local income taxes.
If I live in a high-tax state, this fund can be more efficient than a slightly higher-yielding alternative.
5. Fidelity Treasury Only Money Market Fund (FDLXX)
Like VUSXX, FDLXX is treasury-only but available with no minimum.
- Yield: 5.21%
- Minimum: $0
- Expense Ratio: 0.43%
- Why I Like It: No corporate debt exposure, high liquidity.
I’ve used it in a taxable brokerage account to earn interest without sacrificing access.
6. T. Rowe Price U.S. Treasury Money Fund (PRTXX)
Another option for conservative investors.
- Yield: 5.19%
- Minimum: $2,500
- Expense Ratio: 0.33%
- Why I Like It: Great for holding emergency funds or IRA distributions.
T. Rowe Price is known for strong client service and conservative management.
7. Federated Hermes Government Obligations Fund (GOFXX)
Federated is a big name in institutional cash management. I consider GOFXX their best offering for retail investors.
- Yield: 5.18%
- Minimum: $1,500
- Expense Ratio: 0.45%
- Why I Like It: Professional management and strong liquidity metrics.
8. American Century Capital Preservation Fund (CPFXX)
CPFXX is often used in retirement plans and 401(k)s.
- Yield: 5.16%
- Minimum: $1,000
- Expense Ratio: 0.50%
- Why I Like It: It’s reliable and typically used for conservative retirement allocations.
9. BlackRock Liquidity FedFund (TFFXX)
I’ve used BlackRock’s institutional share classes before, and they manage cash efficiently.
- Yield: 5.15%
- Minimum: $1,000
- Expense Ratio: 0.18%
- Why I Like It: Strong compliance, fast settlement, and good transparency.
10. Northern U.S. Government Select (NOGXX)
Northern Trust manages this fund with institutional-level controls.
- Yield: 5.12%
- Minimum: $2,500
- Expense Ratio: 0.25%
- Why I Like It: It’s a safe harbor when markets feel shaky and I want my cash earning something meaningful.
How I Use Money Market Mutual Funds
Here’s how I personally allocate:
| Account Type | Fund | Use |
|---|---|---|
| Taxable | VUSXX | Avoid state tax on short-term cash |
| Roth IRA | VMFXX | Temporary holding before investing |
| Brokerage | SWVXX | Sweep account for idle cash |
| Emergency Fund | SPRXX | High liquidity + yield |
| Business Account | GOFXX | Cash management |
Final Thoughts
Money market mutual funds aren’t exciting—but they’re not meant to be. When rates are high, they’re one of the smartest places to stash short-term cash. I don’t use them for growth, but for safety, liquidity, and modest yield, they’ve earned a permanent role in my portfolio.
