VUSXX vs VMFXX (2025): Which Vanguard Money Market Fund Fits Your Financial Strategy?

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When choosing a place to park your cash with minimal risk, two of Vanguard’s most trusted money market mutual funds often come into focus: the Vanguard Treasury Money Market Fund (VUSXX) and the Vanguard Federal Money Market Fund (VMFXX).

Both offer investors a safe, liquid, and interest-bearing option that seeks to preserve capital while generating modest income. But when you compare VUSXX vs VMFXX side-by-side, the differences in holdings, tax treatment, and yield performance can lead to very different outcomes depending on your financial goals.

This 2025 guide provides a fact-based, investor-focused breakdown of VMFXX vs VUSXX to help you make an informed choice.

Understanding the Core Purpose of Each Fund

VUSXX is designed to invest exclusively in U.S. Treasury obligations. These include Treasury bills, notes, and other short-term debt directly backed by the full faith and credit of the United States government.

VMFXX, on the other hand, invests in a broader range of short-term government securities. This includes not just Treasuries but also obligations of U.S. government agencies and repurchase agreements collateralized by government securities.

For official fund holdings and structure, visit Vanguard’s VUSXX fund page and VMFXX fund page.

Both funds are classified as “government money market funds,” but VUSXX is more narrowly focused.

Safety and Risk Considerations

From a risk standpoint, both funds offer a high degree of stability. However, because VUSXX invests solely in Treasuries, it is considered the slightly safer option. Treasury securities are regarded as virtually risk-free in terms of credit risk.

VMFXX also holds very low-risk securities, but it includes instruments such as repurchase agreements (repos) and agency debt, which, while still considered safe, introduce a modest additional layer of complexity and counterparty exposure.

If absolute safety is your top priority, VUSXX may edge ahead. But if you’re comfortable with a slightly broader mandate in pursuit of potentially higher income, VMFXX is also a strong contender.

Expense Ratios in 2025

One of the reasons both funds are attractive to cash-conscious investors is their low expense ratios. As of 2025:

• VUSXX has an expense ratio of 0.09%

• VMFXX has an expense ratio of 0.11%

The difference is minor, but VUSXX retains a slight advantage for cost-sensitive investors. Lower expenses mean you keep more of your yield.

Yield Performance: VUSXX Yield vs VMFXX Yield

The biggest point of comparison in the VUSXX vs VMFXX debate for 2025 is yield. Historically, yields have fluctuated between the two funds depending on market conditions, the Federal Reserve’s interest rate stance, and demand for Treasuries.

As of Q2 2025:

• VMFXX yield: 5.03% (7-day SEC yield)

• VUSXX yield: 4.94% (7-day SEC yield)

While the yield spread is relatively narrow, it has remained consistent in favor of VMFXX over the past several quarters. That slight performance gap is due in part to VMFXX’s inclusion of repo agreements, which can offer marginally higher rates than Treasuries alone.

For real-time yield updates, consult Vanguard’s Money Market Fund Comparison Tool.

For investors strictly chasing yield, VMFXX may currently be the more attractive option.

Tax Considerations: State and Federal Implications

One often overlooked advantage of VUSXX lies in state tax exemption. Because VUSXX invests exclusively in U.S. Treasury securities, most states do not tax the interest income earned from it.

In contrast, VMFXX’s yield is not state-tax exempt, as it includes non-Treasury instruments. So while VMFXX may deliver a slightly higher yield before taxes, your after-tax yield could be higher with VUSXX if you live in a high-tax state like California or New York.

Learn more about Treasury security tax rules from the IRS.

Minimum Investment Requirement

Both funds require a minimum investment of $3,000, making them accessible to retail investors while still maintaining a level of exclusivity that helps keep operational costs low.

Liquidity and Accessibility

Vanguard money market funds are designed for daily liquidity. Investors can buy and sell shares at a stable net asset value (NAV) of $1.00. Funds are generally available for withdrawal within 1–2 business days.

This makes both VUSXX and VMFXX suitable for short-term savings, emergency funds, or cash parking while awaiting other investment opportunities.

Summary Table: VUSXX vs VMFXX (2025)

Feature	VUSXX	VMFXX
Investment Focus	U.S. Treasury securities only	Treasuries + repos + agency debt
Expense Ratio	0.09%	0.11%
7-Day SEC Yield (2025)	4.94%	5.03%
State Tax Exemption	Yes (in most states)	No
Federal Tax Treatment	Taxable	Taxable
Risk Level	Very low	Very low
Minimum Investment	$3,000	$3,000
Liquidity	Daily	Daily

When Should You Choose VUSXX?

VUSXX may be the better fit for:

• Residents of high-tax states who value state income tax exemption

• Investors who want the safest possible short-term vehicle

• Those prioritizing capital preservation above all else

• Long-term holders who want consistent, low-cost, low-volatility performance

Explore our guide on VUSXX State Tax Advantages for deeper insights.

When Should You Choose VMFXX?

VMFXX is ideal for:

• Investors focused on maximizing yield, even if marginally

• Those comfortable with a slightly broader investment scope

• Savers with no significant state income tax burden

• Individuals looking to park cash temporarily before reinvesting

You might also be interested in our article on How to Use Money Market Funds in a Rising Rate Environment.

Notable 2025 Considerations for Investors

The ongoing fight against inflation and continued rate moves by the Federal Reserve have made money market funds attractive again. Investors seeking a safe haven that pays more than traditional savings accounts are flocking to these low-cost, high-liquidity funds.

However, as interest rates evolve, so too will the VMFXX yield and VUSXX yield. It’s important to regularly check current rates and fund updates directly from Vanguard.

Also, note that neither fund is FDIC insured, as they are mutual funds, not bank accounts. But both maintain strict internal credit quality and liquidity standards in compliance with SEC Rule 2a-7.

Final Thoughts: Tailor Your Choice to Your Tax Profile and Cash Strategy

VUSXX vs VMFXX isn’t a battle with a clear winner. Instead, the right choice depends on your personal circumstances:

• Tax situation

• Risk tolerance

• Income needs

• Investment horizon

Some investors even split their cash allocations between the two to diversify across slightly different yield and tax characteristics.

If you’re unsure which option aligns with your financial strategy, it may be worth discussing the specifics with a fiduciary financial advisor who can assess your full picture.

Both funds remain excellent vehicles in 2025 for conservative investors aiming to preserve cash while generating passive income in a rising-rate environment.

Disclaimer:

VUSXX.com is an independent financial education site and is not affiliated with Vanguard or any of its funds. The content provided is for informational purposes only and does not constitute investment advice. Always consult a licensed financial advisor before making investment decisions. Please refer to Vanguard.com for official fund information.