Can You Lose Money in SPAXX? 5 Situations When SPAXX Loses Money
Fidelity’s Government Money Market Fund SPAXX is a conservative short-term fund investing almost entirely in U.S. government obligations and repos.
It aims to preserve capital and maintain a stable $1.00 NAV, while offering current income roughly matching short-term interest rates.
But it is not without any risk.
How Safe Is SPAXX?
SPAXX invests at least 99.5% in
- Cash equivalents
- U.S. Treasury bills/notes/bonds, and
- Fully‑collateralized repurchase agreements.
These are among the highest‑credit instruments, and their collateral is 100% backed by Treasuries or federal agency securities.
When Does SPAXX Pay Interest?
Find out when Fidelity’s SPAXX money market fund pays its monthly dividends, how the payment schedule works, and what can affect your earnings.
Check SPAXX Payment Dates
Can SPAXX Break the Buck?
Yes, theoretically SPAXX can break the buck, meaning its share price falls below $1.00.
But in Fidelity’s history, none of its money-market funds have ever permanently lost principal or broken the buck.
Fidelity Government Money Market Fund aims to maintain a stable $1 share price, but it cannot guarantee principal.
Although the risk is low, investors could lose money under extreme market conditions.
Is SPAXX FDIC-Insured?
No, SPAXX is not FDIC-insured.
Instead, Fidelity offers an alternative called the FDIC-Insured Deposit Sweep Program, which places eligible cash in participating banks.
| Protection | Coverage Status | Explanation |
|---|---|---|
| FDIC insurance | Not covered | SPAXX is a mutual fund, not an insured bank deposit. |
| SIPC protection | Eligible | May protect eligible assets if the brokerage fails and assets are missing. |
| Protection against investment losses | Not covered | SIPC does not reimburse losses caused by SPAXX’s declining value. |
| SEC regulation | Regulated | Federal rules apply, but regulation does not guarantee your principal. |
What Are the Risks of Investing in SPAXX?
| Risk Type | Description | Likelihood of the Risk Occurring | Impact If the Risk Occurs | Mitigating Factor Safeguards that reduce the risk. |
|---|---|---|---|---|
| Credit Risk | Holds U.S. Treasuries and Treasury-backed repo. Only a catastrophic U.S. default would threaten principal, an event most analysts deem extremely unlikely. | Low | Medium | Portfolio is limited to government debt and Treasury-collateralized repo. |
| Interest-Rate Risk | Ultra-short portfolio. Rate moves change the fund's yield and future distributions, not the $1 NAV. If rates fall, yields fall too. | Medium | Low | Very short maturities, and amortized cost accounting absorbs up to 0.5% of change. |
| Liquidity Risk | Redemptions are available anytime in normal markets. If many investors redeemed at once, the fund might have to sell assets quickly. | Low | Medium | At least 10% held in daily liquid assets, and Treasuries are highly liquid. |
| Redemption Risk | Linked to liquidity. Some prime funds faced gates in 2008 and 2020, while government funds like SPAXX did not. | Low | Low | Current rules do not allow redemption gates or mandatory fees for government funds. |
| Market Risk | Share price stays at $1.00 unless the fund "breaks the buck." Future dividends can vary with credit markets and rates. | Medium | Low | Only income varies. Equity market swings do not affect the fund. |
| Concentration Risk | All assets sit in government debt and repo, so credit quality is uniform. A major downgrade of U.S. credit would affect every holding. | Medium | Medium | Concentration is intentional. Treasuries are seen as the world's safest debt. |
| Operational Risk | Clerical errors or fraud are possible but remote. The 1994 break event involved misuse of derivatives. | Low | Low | Robust systems, compliance and audits. Current rules prohibit such derivative trades. |
| Regulatory Risk | Governed by SEC Rule 2a-7. Future changes, such as forcing all money funds to float their NAV, could affect SPAXX. | Low | Medium | Rules for government funds have been stable, and no floating NAV is required today. |
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Can You Lose Your Initial Investment in SPAXX?
Yes, you can lose your initial investment in SPAXX. Although SPAXX aims to maintain a stable $1.00 share price and invests primarily in U.S. government securities, your principal is not guaranteed. SPAXX is not FDIC-insured.
But principal loss in SPAXX is extremely unlikely.
Which Fidelity Core Position Should You Choose?
Compare SPAXX, FZFXX, FCASH and Fidelity’s FDIC-insured sweep to understand their yields, cash access, tax considerations and protection before choosing where to hold your uninvested cash.
Compare Fidelity Core Options
Situations When You Could Lose Money in SPAXX
- A major financial market crisis: Severe market turmoil causes the value of securities held by SPAXX to decline.
- A government-related issuer defaults: An issuer of securities held by the fund fails to make required payments.
- Interest rates rise sharply: The market value of some securities held by SPAXX decreases.
- Repurchase agreement losses: A counterparty fails to meet its obligations under a repurchase agreement, and the fund cannot recover the full amount owed.
- SPAXX breaks the buck: The fund’s share price falls below its target of $1.00, meaning your shares are worth less than you paid
SPAXX FAQ
SPAXX is a government money market fund built to hold a steady $1 share price, and it’s generally considered a low-risk place for cash. It isn’t risk-free, though.
It’s rare, but yes. If the fund’s share value dropped below $1, investors could get back less than they put in.
No. SPAXX isn’t FDIC-insured, and SIPC protects against a brokerage firm failing, not against investment losses.
The main ones are government credit risk, liquidity risk, and falling yields when interest rates drop.
Yes, but only if the fund’s share value falls below $1, which doesn’t happen often.
Match your cash holdings to your near-term needs. You can also spread your money across other options, such as FDIC-insured bank deposits and Treasury bills.
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