Top Financials ETFs Poised To Rally Further

February 03, 2017

Ticker Fund Issuer Expense Ratio AUM Segment
XLF  Financial Select Sector SPDR Fund SSgA 0.14% $22.76B Equity: U.S. Financials
VFH  Vanguard Financials Index Fund Vanguard 0.10% $5.22B Equity: U.S. Financials
KRE  SPDR S&P Regional Banking ETF SSgA 0.35% $3.62B Equity: U.S. Banks
KBE  SPDR S&P Bank ETF SSgA 0.35% $3.09B Equity: U.S. Banks
IYF  iShares U.S. Financials ETF BlackRock 0.44% $1.87B Equity: U.S. Financials
FAS  Direxion Daily Financial Bull 3x Shares Direxion 0.96% $1.34B Leveraged Equity: U.S. Financials
IYG  iShares US Financial Services ETF BlackRock 0.44% $1.14B Equity: U.S. Financial Services
FXO  First Trust Financials AlphaDex Fund First Trust 0.64% $1.00B Equity: U.S. Financials
KIE  SPDR S&P Insurance ETF SSgA 0.35% $959.59M Equity: U.S. Insurance
UYG  ProShares Ultra Financials ProShares 0.95% $799.45M Leveraged Equity: U.S. Financials

 

Unsurprisingly, the Financial Select Sector SPDR Fund (XLF), part of the venerable line of SPDR sector funds, is the largest ETF in the space. It's a low-cost offering that provides exposure to the financial sector within the S&P 500. Aside from XLF, there are four other broad financial ETFs that track the complete sector―including the banks, diversified financials and insurance industry groups.

The Vanguard Financials Index Fund (VFH), one of the cheapest funds in the space, takes a broad approach by holding all financials stocks in the top 98% of the U.S. market by capitalization.

The iShares U.S. Financials ETF (IYF) is another broad fund that holds stocks across the market-cap spectrum. IYF still holds real estate stocks (20% of the portfolio), which contrasts with many other financials ETFs that had spun off real estate to adhere to changes in the Global Industry Classification Standard last year.

For investors looking for an iShares financial product that excludes real estate, the iShares U.S. Financial Services ETF (IYG) fits the bill. It holds a similarly broad basket of financials as its sister fund, but omits real estate.

Meanwhile, the First Trust Financials AlphaDex Fund (FXO) uses a quant model to select financial stocks to hold based on price appreciation, sales to price ratios, sales growth and value factors. The fund has a relatively high expense ratio—0.64%—but may appeal to investors who have faith in the multifactor AlphaDex methodology. 

 

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