SWVXX vs. SGOV: Should Schwab Cash Go in a Money Fund or a T-Bill ETF?

Yields move. Returns are each sponsor’s own figures for periods ending August 31, 2026; current yields are from October 5 and 6, 2026.

The short version

For cash you are parking in a taxable Schwab account, SGOV is the better holding in most cases. In the year to August 31, 2026 it returned 3.78% after fees against 3.68% for SWVXX, and it was about 0.1 percentage point a year ahead over three years as well. SGOV holds Treasury bills, and iShares reported 95.14% of its 2025 income as state-tax-exempt; SWVXX holds bank and corporate debt and had none. For one modeled California saver at 32% federal and 9.3% state, that was worth about $200 a year on $50,000 at the past year’s returns. At Schwab neither one is your default cash and neither is sold automatically to pay for a trade, so SGOV’s usual convenience penalty is small here. SWVXX’s remaining advantages are a fixed $1.00 price and dollar-amount orders.

At Fidelity, the case for keeping cash in a money fund rests on the core position: the fund pays for trades and withdrawals on its own, and an ETF has to be sold first. Schwab works differently. New cash lands in a bank sweep, and SWVXX, like SGOV, has to be bought and sold by hand. That leaves yield, tax and risk to decide it.

What differs

SWVXX is the Schwab Prime Advantage Money Fund, a retail prime money market fund that keeps a $1.00 share price and holds certificates of deposit, commercial paper and repurchase agreements. It charges 0.34%.¹² SGOV is the iShares 0-3 Month Treasury Bond ETF. It holds Treasury bills that mature within three months, charges 0.09%, and trades on an exchange at a price that moves by a few cents a month. It had $114 billion in assets on October 6, 2026.³

	SGOV	SWVXX
Holds	Treasury bills, 0-3 months	CDs, commercial paper, repo
Expense ratio	0.09%	0.34%
1-year return to Aug 31, 2026	3.78%	3.68%
3-year return, annualized	4.59%	4.47%
Current yield	3.71% (30-day SEC, Oct 5)	3.70% (7-day, Oct 6)
2025 income from U.S. government obligations	95.14%, passes CA/CT/NY test	0%
Price	Floats, about $100.45	$1.00
How you trade	Whole shares, market hours, $0 online at Schwab	Any dollar amount, priced at close, $0
Fee on sales in a crisis	None	Up to 2%, at Schwab’s discretion

Returns are net of fees: SWVXX from Schwab’s fund page, SGOV compounded from iShares’ monthly NAV returns. Sources below.

SGOV earned more before tax

Schwab reported SWVXX’s total return as 3.68% for the year to August 31, 2026 and 4.47% a year over three years.¹ Compounding iShares’ published monthly NAV returns over the same windows gives 3.78% and 4.59% for SGOV. The same method reproduces iShares’ own published figures to September 30, 3.74% and 4.54%, so the calculation matches the sponsor’s.³

The reason is the fee. A prime fund earns a little more than Treasury bills because it lends to banks and companies, but SWVXX charges 0.25 percentage point more than SGOV, and over these periods the fee gap was larger than the prime premium. Current yields show the two about even: 3.71% for SGOV and 3.70% for SWVXX. These are different measures, a 30-day SEC yield and a 7-day yield, both net of expenses, so treat them as close rather than identical.³¹

After tax the gap widens

Interest on Treasury bills is exempt from state income tax. iShares reported 95.14% of SGOV’s 2025 income as coming from U.S. government obligations and marked the fund as meeting the 50% quarter-end test that California, Connecticut and New York require.⁴ SWVXX does not appear in Schwab’s table of funds with government income, which Schwab defines as 0%.⁵

Using the past year’s returns and $50,000, for one modeled saver at a 32% federal rate:

State	SGOV after tax	SWVXX after tax	SGOV ahead per year
California, 9.3%	2.55%	2.16%	about $200
A 5% state	2.56%	2.32%	about $120
No state income tax	2.57%	2.50%	about $35

Trailing 1-year returns to August 31, 2026 (SGOV 3.78%, SWVXX 3.68%), 2025 government-income shares, no NIIT. A scenario, not a forecast.

Run your own numbers

The calculator starts from the October yields, which put the two funds about even before tax, so it shows a smaller gap than the trailing returns do. Slide the yields to whatever iShares and Schwab show today.

At Schwab, convenience barely separates them

A purchased money fund at Schwab behaves more like an ETF than most people expect. Neither SWVXX nor SGOV is your cash balance; both have to be sold before the money can be spent, and Schwab does not sell either automatically to pay for a trade. In a margin account, buying a stock while your cash sits in either one turns the purchase into a margin loan.⁶ Settlement is about the same too: Schwab says selling money fund shares “generally takes one business day to settle,” and ETF trades settle on the next business day under the T+1 cycle.⁷⁸

The real differences are smaller:

Order type. SWVXX takes any dollar amount and fills at the 4 p.m. close at $1.00. SGOV trades in whole shares of about $100 during market hours, so a few dollars stay behind in the sweep and you pay half the bid-ask spread each way. The median spread was 0.01% in early October 2026, about $5 for buying and later selling $50,000.³
When income starts. A SWVXX purchase starts earning dividends the next business day.² An SGOV buyer owns the accruing interest from the trade onward. The difference is about one day’s interest, roughly $5 on $50,000.
The price. SGOV’s price climbs through the month as interest accrues and drops on the ex-dividend date, usually the first business day of the month. That is the monthly distribution leaving the price, and total return is smooth. SWVXX shows a flat $1.00 and pays the same income as a monthly dividend.

What could go wrong with each

SGOV’s holdings are Treasury bills, so its credit risk is the U.S. government’s. Its risk as an ETF is that the market price can drift from the value of its holdings when markets are under stress; on October 6, 2026 the gap was 0.01%.³ SWVXX holds bank and corporate debt. When the Reserve Primary Fund broke the buck in September 2008, its investors eventually got back more than 98 cents on the dollar after a delay, and since 2023 a prime fund can charge a fee of up to 2% on sales if its board decides that is in the fund’s interest. Schwab’s board has delegated that decision for SWVXX to the fund’s adviser.² The details are in SNSXX vs. SWVXX. Neither fund is FDIC insured; both are covered by SIPC if Schwab itself fails, which does not cover a fall in value.

Where SNSXX fits

If you want a $1.00 price and the state-tax exemption without trading an ETF, SNSXX, the Schwab U.S. Treasury Money Fund, is the middle option. Schwab reported 99.99% of its 2025 income as Treasury interest.⁵ It returned 3.55% in the year to August 31, 2026, a little less than either fund here, because it charges the same 0.34% as SWVXX and holds Treasuries only.¹ On the past year’s returns SGOV came out about $70 to $80 a year ahead of it on $50,000 at a 32% federal rate.

When SWVXX is still the right choice

SWVXX makes sense when the money moves often in odd amounts and the balance is small. On $10,000 in a state with no income tax, the past year’s gap was about $7 after tax, less than the effort of trading in whole shares. It also fits someone who simply prefers a fixed $1.00 price. Inside an IRA, where state tax does not apply, the choice comes down to the 10 basis points SGOV earned over the past year against those conveniences. For large balances in a taxable account, especially in a state with an income tax, SGOV comes out ahead.

Key takeaways

SGOV earned more before tax: 3.78% against 3.68% in the year to August 31, 2026, and about 0.1 percentage point a year more over three years, mostly because it charges 0.09% to SWVXX’s 0.34%.
SGOV’s income was 95.14% state-exempt for 2025 and passed the CA/CT/NY test; SWVXX’s was 0%.
For one modeled California saver, about $200 a year on $50,000 at the past year’s returns, about $120 in a 5% state and $35 with no state tax.
Convenience is close at Schwab. Both must be bought and sold by hand and both settle in about a business day.
SWVXX’s advantages are a $1.00 price and dollar-amount orders. Its risks are bank and corporate credit and a possible fee on sales in a crisis.

How Summitward helps

Cash tracker

Enter your cash positions and see what each yields after your own federal and state rates, including the CA/CT/NY threshold rule.

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Frequently asked questions

Is SGOV better than SWVXX?

In a taxable account in a state with an income tax, yes, on both return and tax. Over the year to August 31, 2026 SGOV returned 0.1 percentage point more before tax, and almost all of its income is state-exempt while none of SWVXX’s is. With no state income tax the difference is the pre-tax gap, about $35 a year on $50,000 over the past year.

Does SGOV cost anything to trade at Schwab?

Online trades of U.S.-listed ETFs are commission-free at Schwab, with a small regulatory fee on sales.⁹ You also pay half the bid-ask spread on each trade, which was a median 0.01% in early October 2026.

Why does SGOV’s price drop at the start of each month?

Interest accrues in the price during the month and is paid out as a distribution, usually on the first business day of the next month. On the ex-dividend date the price falls by about the amount paid, $0.30 a share on October 1, 2026.³

What about SGVT, Schwab’s money market ETF?

The Schwab Government Money Market ETF launched in June 2025, charges 0.28% and had a 3.67% 7-day yield on October 6, 2026. It is a government fund that holds agency debt as well as Treasuries, and only 36.66% of its 2025 income came from U.S. government obligations; Schwab did not mark it as meeting the CA/CT/NY test.⁵¹⁰ It charges more than SGOV and passes through less of the state exemption.

Should my emergency fund be in SGOV or SWVXX?

Keep the first few weeks of spending in the sweep or a bank account, since both funds take about a business day to turn into cash. For the rest, SGOV or SNSXX avoids the prime-fund fee and credit risk that matter most in the kind of crisis that makes you draw on the fund.

Related guides

SGOV vs. T-Bills: whether to skip the ETF and buy the bills yourself.
SNSXX vs. SWVXX: Schwab’s Treasury money fund against its prime fund.
Schwab Bank Sweep vs. SWVXX: what leaving cash in Schwab’s default sweep costs.
SPAXX vs. SGOV: the Fidelity version, where the money fund is the core position.
SGOV vs. VBIL: two Treasury bill ETFs compared.
What Percent of SGOV Is State Tax Exempt?: 2025 state-exempt percentages for 15 cash funds.

Sources

Schwab Asset Management, SWVXX and SNSXX fund pages: 7-day yields as of October 6, 2026; total returns for periods ended August 31, 2026; expense ratios. SWVXX, SNSXX
Charles Schwab Family of Funds, Schwab Taxable Money Funds prospectus, April 28, 2026 (holdings, dividend timing, liquidity fees). sec.gov
iShares, SGOV fund page and data download: 30-day SEC yield, median bid-ask spread and premium/discount as of October 5-6, 2026; monthly NAV total returns; distributions; expense ratio; net assets. ishares.com
BlackRock, “2025 iShares U.S. Government Source Income Information” (SGOV 95.14%; quarterly 50% marker). ishares.com (PDF)
Schwab Asset Management, “2025 Supplementary Tax Information” (SNSXX 99.99%, SGVT 36.66%; funds not shown had 0%). schwabassetmanagement.com
Charles Schwab, “Margin Loans and Purchased Money Market Funds,” November 4, 2025. schwab.com
Charles Schwab, “What Are Money Market Funds and How Do They Work?” September 2026. schwab.com
U.S. Securities and Exchange Commission, “SEC Marks Compliance Date for T+1 Settlement Cycle,” May 21, 2024. sec.gov
Charles Schwab, pricing (online trades of U.S. exchange-listed ETFs without commission; an industry fee applies to sales). schwab.com
Schwab Asset Management, SGVT fund page (inception June 12, 2025; 0.28% expense ratio; 7-day yield as of October 6, 2026). schwabassetmanagement.com

Author disclosure

I have no relationship with Schwab or BlackRock. Every figure is the sponsor’s own on the date given, except SGOV’s returns to August 31, which I compounded from iShares’ monthly NAV returns and checked against iShares’ published figures for September 30. Nothing here is tax advice.