6 Solid Reasons To Buy Financial ETFs Now

Vanguard Financials ETF (VFH - Free Report)

This fund manages nearly $5.9 billion in asset base and provides exposure to a basket of 399 stocks by tracking the MSCI US Investable Market Financials 25/50 Index. It is pretty well spread across each component as none of these holds more than 9% of assets. Banks account for nearly half of the portfolio, followed by insurance (20%) and financial services (10%). The product sees solid volume of more than 1 million shares and charges 10 bps in annual fees. It has gained 5.6% since the start of the year.

iShares U.S. Financial Services ETF (IYG - Free Report)

This product follows the Dow Jones U.S. Financial Services Index and offers exposure to U.S. investment banks, commercial banks, asset managers, credit card companies, and securities exchanges. Holding 110 stocks in its basket, it is highly concentrated on the top five firms with a combined 43.4% share while other firms hold no more than 3.87% of assets. Banks take the top spot at 57.8% from the sector look while diversified financials and software & service make up for the remainder. IYG has amassed $1.2 billion in its asset base and trades in a good average daily volume of about 167,000 shares. It charges an annual fee of 44 bps from investors and has gained 6.9% so far this year.

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Gary Tanashian 3 years ago Contributor's comment

I shorted both GS and KBE and am long TLT for exact opposite reasons. This article should have been written last summer when it was appropriate to buy the banks/financials IMO.