The ETF Underdogs, Part 8: Money Market ETFs

State Street Prime Money Market ETF

MMK

Prime money market funds sit a step up the risk spectrum from government-only money market funds. Instead of holding just Treasuries and agency securities, they can invest in a broader mix of short-term, high-quality instruments like commercial paper, certificates of deposit, and asset-backed securities.

The trade-off is straightforward. You take on a bit more credit risk in exchange for slightly higher yields, while still staying within the short-duration, capital preservation mandate typical of cash-like strategies.

MMK brings that prime money market approach into an ETF wrapper, while still qualifying under Rule 2a-7 of the Investment Company Act of 1940. That’s important, because Rule 2a-7 imposes strict requirements around maturity, credit quality, and liquidity to maintain stability.

In terms of implementation, the ETF tracks the ICE BofA SOFR Overnight Rate Index, effectively referencing a synthetic exposure tied to the secured overnight financing rate carried to a stated maturity. It debuted on February 10, 2026, and has just over $25 million in assets under management.

State Street prices the ETF at a 0.18% expense ratio. Like most cash-like instruments, distributions are paid monthly, with a current seven-day SEC yield of 3.61%. This is where investors often get tripped up.

Unlike bond ETFs, which typically quote a 30-day SEC yield, money market funds use a seven-day SEC yield. That figure annualizes the fund’s income over the past week, making it more responsive to changes in short-term interest rates, but also a bit more variable from week to week.

Looking under the hood, the portfolio is largely composed of asset-backed and financial commercial paper, complemented by repurchase agreements backed by government securities and Treasuries, along with a smaller allocation to certificates of deposit.

 In line with money market conventions, a large portion of the portfolio matures very quickly, with about 39% rolling over overnight. The rest is split across slightly longer maturities, with a barbell between positions over 90 days and a portion in the 2 to 90 day range.

JPMorgan 100% U.S. Treasury Securities Money Market ETF

JMMF

Investors looking for a bit more safety may prefer a government money market fund over a prime strategy. That means at least 99.5% of the portfolio must be invested in cash, U.S. government securities, or repurchase agreements that are fully collateralized by those same government securities.

In practice, you’re stripping out most credit risk and relying almost entirely on the U.S. government as the underlying borrower. But even within government money market funds, there’s a spectrum.

Some strategies still make use of repurchase agreements to enhance liquidity and yield, while others take a more conservative route and stick strictly to Treasury securities.

JMMF falls into that latter camp. With about $60 million in assets under management since launching in December 2025, the ETF invests exclusively in Treasury bills, notes, and bonds.

JMMF’s current 3.52% seven-day SEC yield is generally exempt from state and local income taxes, which can matter depending on where you live. It comes at a slightly lower cost, with a 0.16% expense ratio compared to MMK.

As with other money market ETFs, JMMF’s NAV isn’t fixed at $1, but in practice it tends to hover around $100, gradually increasing with accrued income before resetting lower on the ex-distribution date.

Finally, while most fixed income ETFs distribute monthly, JMMF pays weekly. It’s a small detail, but for investors who prefer more frequent cash flow, it’s a noticeable difference.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.