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Should You Invest in the iShares U.S. Financials ETF (IYF)?

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  • VFH
  • BRK-B

The iShares U.S. Financials ETF (IYF) was launched on 05/22/2000, 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.

Additionally, sector ETFs offer convenient 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 $2.44 billion, making it one of the larger 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 Dow Jones U.S. Financials Index measures the performance of the financial sector of the U.S. equity market.

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 0.41%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.21%.

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 71.30% of the portfolio. Real Estate and Information Technology round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 7.69% of total assets, followed by Jpmorgan Chase & Co (JPM) and Visa Inc Class A (V).

The top 10 holdings account for about 40.05% of total assets under management.

Performance and Risk

Year-to-date, the iShares U.S. Financials ETF return is roughly 36.97% so far, and is up about 62.37% over the last 12 months (as of 11/01/2021). IYF has traded between $56.68 and $89.93 in this past 52-week period.

The ETF has a beta of 1.08 and standard deviation of 27.29% for the trailing three-year period, making it a medium risk choice in the space. With about 239 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. 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, IYF 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 $11.67 billion in assets, Financial Select Sector SPDR ETF has $45.63 billion. VFH has an expense ratio of 0.10% and XLF charges 0.12%.

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
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Visa Inc. (V) : 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
 
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