Texas Capital Government Money Market ETF (MMKT)

The government money market

MMKT holds US Treasury bills, securities issued or guaranteed by Fannie Mae and Freddie Mac, and occasionally other government-backed instruments that mature within a year. The US Treasury issues bills constantly — the government is perpetually rolling over its debt — so there is an enormous, liquid market for these securities.

For institutional investors and the very wealthy, buying Treasury bills directly is straightforward: walk into the market, place an order, pay the price. For everyone else, Treasury bills involve minimum purchases of $100 or more and the need to hold them until maturity or sell them to someone else. MMKT eliminates both problems. You buy a single share on the exchange, you get immediate diversification across dozens of different bills and maturities, and you can sell whenever you want.

How it works

The fund manager — Texas Capital — buys Treasury bills and similar government-backed short-term securities and holds them in the fund’s portfolio. As those bills mature, the cash is reinvested into new ones maturing a few weeks or months out. This rolling process ensures that the fund always has a laddered portfolio of very short-term debt, so there is no concentration risk on any single maturity date and no long gap between when your money arrives and when yields reset.

The fund distributes its interest income to shareholders regularly, usually monthly. That income is fully taxable at the federal and state level — it is regular income, not the tax-advantaged kind — but it is as safe as income gets because it is literally backed by the full faith and credit of the US government.

Why hold government bills in an ETF?

The principal advantage is simplicity and scale. Direct Treasury bill ownership is possible, but it requires discipline to ladder them properly, monitor maturities, and keep reinvesting. An ETF does that automatically and lets you participate with as little as a single share.

MMKT also offers daily liquidity. If you need your cash back, you sell the shares at market price and settle within two days. With physical bills, you either hold them to maturity or sell them in the secondary market, which is possible but less frictionless.

The third advantage is psychological. In a market panic, MMKT will hold its value (or nearly so) because it is backed by US government securities. Stocks fall, bonds tumble, but a government money market fund sits stable. That stability can matter psychologically when everything else is volatile.

The cost-benefit tradeoff

MMKT carries an expense ratio charged by the fund — a small annual fee expressed as a percentage of assets. That fee is a drag on returns because it comes out of the interest the fund earns. However, that fee is typically very low for a money market ETF, often less than 0.1% annually, which is negligible compared to the yields available.

The real tradeoff is not cost but opportunity. In a low-rate environment, money market funds earn almost nothing — they might pay 0.25% when savings accounts are paying the same. When the Fed holds rates high, as it did in 2023–2024, money market ETFs suddenly become attractive because they offer genuine yields — 4% or 5% — and they offer it with zero duration risk. In a falling-rate environment, that appeal fades quickly.

The predictability advantage

Unlike bond funds, which rise and fall in value as interest rates change, MMKT’s share price stays essentially constant. You are not exposed to interest-rate risk in the capital-appreciation sense. Instead, you are purely exposed to the yield that prevails at the moment. If rates rise tomorrow, old bills mature and new ones are bought at higher rates, so your forward yield rises — but the share price does not jump down.

That predictability is valuable for cash management. You know exactly what you are getting: extremely safe principal and a known yield (today’s yield will change as you reinvest, but your existing holdings are locked in).

When to use MMKT

MMKT is appropriate for cash that you will need within a year or two, that you might need to access on short notice, and that you want to keep completely safe. It is not an investment vehicle in the traditional sense — it is a way to earn a return on money you are already saving, without taking risk. For that specific purpose, a government-focused money market ETF like MMKT is one of the simplest and lowest-friction options available.