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.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.28 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 6.45%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Hsbc Holdings Plc (HSBA) accounts for about 9.09% of total assets, followed by Allianz (ALV) and Zurich Insurance Group Ag (ZURN).
The top 10 holdings account for about 26.74% of total assets under management.
Performance and Risk
The ETF has lost about -13.63% so far this year and is down about -14.41% in the last one year (as of 11/16/2022). In that past 52-week period, it has traded between $13.63 and $21.84.
The ETF has a beta of 1.09 and standard deviation of 32.88% for the trailing three-year period, making it a medium risk choice in the space. With about 87 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI Europe Financials ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. EUFN, then, is not a suitable option for investors seeking exposure to the Financials ETFs segment of the market. Instead, there are better ETFs in the space to consider.
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 $9.27 billion in assets, Financial Select Sector SPDR ETF has $32.63 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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