Should You Invest in the iShares U.S. Financials ETF (IYF)?
Launched on 05/22/2000, the iShares U.S. Financials ETF (IYF) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Broad segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 11, placing it in bottom 31%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.82 billion, making it one of the largest ETFs attempting to match the performance of the Financials - Broad segment of the equity market. IYF seeks to match the performance of the Dow Jones U.S. Financials Index before fees and expenses.
The Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index measures the performance of the financial sector of the U.S. equity market.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.82%.
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.
This ETF has heaviest allocation in the Financials sector--about 99.50% of the portfolio.
Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 13.42% of total assets, followed by Jpmorgan Chase & Co (JPM) and Bank Of America Corp (BAC).
The top 10 holdings account for about 46.68% of total assets under management.
Performance and Risk
So far this year, IYF has added roughly 1.93%, and was up about 11.77% in the last one year (as of 09/26/2023). During this past 52-week period, the fund has traded between $67.55 and $82.05.
The ETF has a beta of 1.03 and standard deviation of 20.47% for the trailing three-year period, making it a medium risk choice in the space. With about 142 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares U.S. 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. IYF, 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 $8.56 billion in assets, Financial Select Sector SPDR ETF has $31.17 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 U.S. Financials ETF (IYF): ETF Research Reports
Bank of America Corporation (BAC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Vanguard Financials ETF (VFH): ETF Research Reports
