Should You Invest in the iShares MSCI Europe Financials ETF (EUFN)?
The iShares MSCI Europe Financials ETF (EUFN) was launched on 01/20/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.25 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. EUFN seeks to match the performance of the MSCI Europe Financials Index before fees and expenses.
The MSCI Europe Financials Index is a free float-adjusted market capitalization weighted index designed to measure the combined equity market performance of the financials sector of developed market countries in Europe.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.48%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 6.86%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Hsbc Holdings Plc (HSBA) accounts for about 9.30% of total assets, followed by Allianz (ALV) and Zurich Insurance Group Ag (ZURN).
The top 10 holdings account for about 41.76% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI Europe Financials ETF has lost about -18.62% so far, and is down about -15.14% over the last 12 months (as of 09/15/2022). EUFN has traded between $14.53 and $21.84 in this past 52-week period.
The ETF has a beta of 1.09 and standard deviation of 32.10% for the trailing three-year period, making it a medium risk choice in the space. With about 89 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI Europe Financials ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EUFN is a good option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $8.81 billion in assets, Financial Select Sector SPDR ETF has $32.25 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares MSCI Europe Financials ETF (EUFN): ETF Research Reports
Autoliv, Inc. (ALV) : Free Stock Analysis Report
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Vanguard Financials ETF (VFH): ETF Research Reports
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