Equity: U.S. Financials
With 13 ETFs and over $60.51B in combined AUM, the Equity: U.S. Financials segment provides exposure to the U.S. space with a focus on Financials securities.
Year-to-date, the best-performing ETF in the segment is the First Trust Financials AlphaDEX Fund (FXO), with a total return of 27.61%. Meanwhile, the most popular ETF is the Financial Select Sector SPDR Fund (XLF) with $38.49BB in assets under management.
Investors should take a look at the iShares U.S. Financial Services ETF (IYG). This fund has been chosen as an Analyst Pick by FactSet, thus is the best ETF for the average investor. IYG invests in a market-cap-weighted subset of US stocks consisting exclusively of financial service firms. IYG has an expense ratio of 0.42% and tracks the Dow Jones U.S. Financial Services Index.
ETF.com Efficiency Insight
The average efficiency score in the Equity: U.S. Financials segment is 87 out of 100, with the Fidelity MSCI Financials Index ETF(FNCL) obtaining the highest rating of 99 out of 100.
Costs dominate the discussion around efficiency. ETFs in the segment have an average expense ratio of 0.40% per year, with the Fidelity MSCI Financials Index ETF (FNCL) having the lowest expense ratio, charging investors 0.08% yearly.
Investors should look for funds with tight tracking, such as the Invesco S&P SmallCap Financials ETF (PSCF), with a 12-month median tracking difference of -0.09%.
ETF.com Tradability Insight
The average tradability score in the Equity: U.S. Financials segment is 86 out of 100, with the iShares U.S. Financials ETF(IYF) obtaining the highest rating of 99 out of 100.
The Financial Select Sector SPDR Fund (XLF) is the undisputed segment leader when it comes to liquidity. The fund trades 1.60B in daily average volume. Investors should also find ample liquidity in the SPDR S&P Bank ETF (KBE), with $134.13M in daily dollar volume.
Use limit orders to trade funds such as the Invesco DWA Financial Momentum ETF(PFI), due to their double-digit market spreads.
ETF.com Fit Insight
The Thomson Reuters US Financials has been selected as the index that most accurately represents the market in question. The benchmark has been selected by the ETF Analytics team at FactSet, according to a series of guidelines to ensure this index accurately captures its market.
Investors trying to match a broad market exposure should pay attention to VFH. This fund obtains a high Fit score and investors should capture market-like returns.
Other funds diverge from the market, by nature of their investment mandates; for example, PFI follows a Momentum strategy and obtains a low Fit score compared with our neutral benchmark.