Is the Victory Money Market Fund USAXX Worth It?

The Victory Money Market Fund (USAXX) is a taxable money market fund and may make sense to investors who are looking for low-risk investments. That’s because this type of fund is a safer alternative to stock investing and often pays more than holding money in a traditional bank account. These funds pool investors’ money to purchase low-risk and highly liquid securities, such as T-bills and commercial paper. On the downside, it offers investors lower yields while charging an expense ratio. In this article, we review the fund, including its objectives, holdings, and performance.

Key Takeaways

• The Victory Money Market Fund is a taxable money market fund.
• The fund’s objective is to provide investors with interest income and liquidity while preserving their capital.
• USAXX’s portfolio consists of cash, T-bills, and corporate bonds.

USAXX Fund Summary

The fund was launched on Jan. 30, 1981. Originally offered through USAA Investments to members of the military and their immediate families, USAXX is now open to anyone. The objectives of this money market fund are to earn interest income, preserve capital, and maintain liquidity by investing in short-term investments of less than one year.

The Victory Money Market Fund has a fairly low barrier to entry with an initial investment of $1,000. The firm waives this minimum requirement for investors who agree to automatic deposits of $50 or more per month. The fund carried an annual net expense ratio of 0.62% as of January 2025.

USAXX Fund Holdings and Performance

Holdings

The fund had net assets of $2.1 billion with 49 holdings as of Dec. 31, 2024. Its portfolio is composed of:

• Cash: 78.15%
• U.S. Treasury Bills: 19.35%
• Corporate Bonds: 2.5%

Its holdings had a weighted average maturity of just 12 days and a weighted average life of 31 days. A short-term debt usually pays lower interest than a comparable long-term bond. Short-term obligations tend to be less sensitive to interest rate changes and are more liquid than longer-term holdings. The holdings typically include the following characteristics; minimal credit risk, instruments issued by a money market fund, or are either issued or guaranteed by the government.

Some of the bond holdings might be foreign or domestic securities, including floating-rate notes (FRNs). These notes pay an adjustable interest rate based on a benchmark, such as the London Interbank Offered Rate (LIBOR).

Note

In 2019, Victory Capital acquired USAA Asset Management Company, including its mutual fund and ETF businesses. As such, it also acquired the USAA Money Market Fund, which it rebranded as the Victory Money Market Fund.

Performance

The fund returned 4.94% to investors on a one-year basis and 1.56% over 10 years as of Dec. 31, 2024. USAXX returned 4.07% since its inception. As of Jan. 14, 2025, the fund paid a seven-day yield of 4.04%.

Protection from Uncertainty

Although money market funds tend to pay less interest as interest rates decline, they can still protect investors from uncertainty. When money market funds were developed in the 1970s and 1980s, interest rates were high and increasing.

In the aftermath of the financial crisis, rates fell to near zero and remained persistently low. That led many to question the value of money market funds. Following the COVID-19 pandemic, inflation spiked. In response, central banks raised interest rates, which made money market funds more attractive again. That said, money market funds are typically chosen more for their liquidity and safety.

Is a Money Market Fund a Mutual Fund?

Yes, a money market fund is a type of mutual fund. Money market funds invest in highly liquid assets, such as cash, cash equivalents, and short-term debt securities that have high credit ratings. These funds are low-risk with promises of high liquidity.

What Does Liquidity Mean?

Liquidity means that investors can get in and out of the fund with ease making the fund ideal for investors looking for a relatively safe place to park money while earning as much interest as possible in the meantime.

Are Money Market Funds Insured by the FDIC?

No, money market funds are not insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC does, however, cover money market deposit accounts, which are interest-bearing accounts that have the features of a checking and savings account.

The Bottom Line

The Victory Money Market Fund provides a reasonably safe alternative to cash or a savings account for investors looking for a place to park money. At the very least, the fund may offer dramatically better principal protection than the stock market. However, investors concerned with safety and liquidity, may be better off with a high yield savings account. They don’t charge expense ratios, while offering similar returns.