{"id":88555,"date":"2023-11-25T01:32:34","date_gmt":"2023-11-25T06:32:34","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/vfh-etf-solid-choice-but-still-not-the-best-financial-sector-etf-nysearcavfh\/"},"modified":"2023-11-25T01:32:37","modified_gmt":"2023-11-25T06:32:37","slug":"vfh-etf-solid-choice-but-still-not-the-best-financial-sector-etf-nysearcavfh","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=88555","title":{"rendered":"VFH ETF: Solid Choice, But Still Not The Best Financial Sector ETF (NYSEARCA:VFH)"},"content":{"rendered":"
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Investment Thesis<\/strong><\/h2>\n

Vanguard Financials Index Fund ETF (NYSEARCA:VFH<\/span>) warrants a hold rating due to its likelihood of underperformance compared to competitor ETFs. Despite having a low expense ratio, VFH is overly diversified and lacks weight on top financial performers. Specifically, VFH has relatively lower weight on Berkshire Hathaway, JPMorgan Chase, and Bank of America while holding several laggards in the financial sector. As a result, VFH will likely underperform due to its current holdings, even when factoring in its lower cost and higher dividend payout.<\/span><\/p>\n

Fund Overview, Objective, and Competitors<\/strong><\/h2>\n

VFH’s objective is to track the performance of the Spliced US IMI Financials 25\/50 benchmark that measures the investment return of stocks in the financial sector. VFH is a passively managed fund that was started in 2004. The fund currently has 394 holdings and $7.87B in AUM. Top competitors for VFH are iShares U.S. Financials ETF (<\/span>IYF), Fidelity MSCI Financials Index ETF (<\/span>FNCL), and Financial Select Sector SPDR Fund (<\/span>XLF). Investors in these ETFs and the financial sector in general are likely to have enjoyed both capital appreciation and a modest dividend yield over the past 5-10 years. However, there are multiple characteristics that set VFH apart from its competitors.<\/span><\/p>\n

VFH Is Disadvantaged in its Holdings<\/strong><\/h2>\n

A key differentiator for VFH compared to its peers is its holdings. VFH is similar to FNCL, which also strives to track the US IMI Financial Index. However, VFH has distinct differences with IYF and XLF. IYF and XLF are notably different because their objective is not to track the US IMI Financial Index but simply to match the performance of the financial sector overall.<\/p>\n

Because IYF is not tied to the same financials benchmark as VFH, IYF has fewer holdings. As a result, IYF can put greater weight on top financial companies like Berkshire Hathaway (BRK.B), JPMorgan Chase & Co. (JPM), and Bank of America (BAC). This heavier weight on top financial companies represents a key advantage for IYF and XLF where VFH lags. In addition to BRK.B, JPM, and BAC, IYF maintains a heavier weight on Goldman Sachs (GS), BlackRock, Inc. (BLK), and The Progressive Corporation (PGR). These represent quality companies that have all outperformed the S&P 500 index over the past five years.<\/p>\n

Quantity of Holdings and Top 10 Weights for VFH and Competitor ETFs<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

VFH<\/strong><\/p>\n<\/td>\n

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IYF<\/strong><\/p>\n<\/td>\n

\n

FNCL<\/strong><\/p>\n<\/td>\n

\n

XLF<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

# Holdings: 394<\/p>\n<\/td>\n

\n

# Holdings:142<\/p>\n<\/td>\n

\n

# Holdings: 418<\/p>\n<\/td>\n

\n

# Holdings: 75<\/p>\n<\/td>\n<\/tr>\n

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BRK.B: 8.51%<\/p>\n<\/td>\n

\n

BRK.B: 13.08%<\/strong><\/p>\n<\/td>\n

\n

BRK.B: 8.21%<\/p>\n<\/td>\n

\n

BRK.B: 13.54%<\/p>\n<\/td>\n<\/tr>\n

\n

JPM: 7.82%<\/p>\n<\/td>\n

\n

JPM: 9.08%<\/strong><\/p>\n<\/td>\n

\n

JPM: 7.85%<\/p>\n<\/td>\n

\n

JPM: 9.15%<\/p>\n<\/td>\n<\/tr>\n

\n

V: 6.42%<\/p>\n<\/td>\n

\n

BAC: 4.58%<\/strong><\/p>\n<\/td>\n

\n

V: 7.10%<\/p>\n<\/td>\n

\n

V: 8.25%<\/p>\n<\/td>\n<\/tr>\n

\n

MA: 6.13%<\/p>\n<\/td>\n

\n

WFC: 3.79%<\/p>\n<\/td>\n

\n

MA: 6.00%<\/p>\n<\/td>\n

\n

MA: 6.91%<\/p>\n<\/td>\n<\/tr>\n

\n

BAC: 3.64%<\/p>\n<\/td>\n

\n

SPGI: 3.18%<\/p>\n<\/td>\n

\n

BAC: 3.77%<\/p>\n<\/td>\n

\n

BAC: 4.26%<\/p>\n<\/td>\n<\/tr>\n

\n

WFC: 2.81%<\/p>\n<\/td>\n

\n

GS: 2.64%<\/strong><\/p>\n<\/td>\n

\n

WFC: 2.75%<\/p>\n<\/td>\n

\n

WFC: 3.22%<\/p>\n<\/td>\n<\/tr>\n

\n

SPGI: 2.21%<\/p>\n<\/td>\n

\n

BLK: 2.58%<\/strong><\/p>\n<\/td>\n

\n

SPGI: 2.37%<\/p>\n<\/td>\n

\n

SPGI: 2.75%<\/p>\n<\/td>\n<\/tr>\n

\n

GS: 1.94%<\/p>\n<\/td>\n

\n

MMC: 2.37%<\/p>\n<\/td>\n

\n

GS: 1.98%<\/p>\n<\/td>\n

\n

GS: 2.30%<\/p>\n<\/td>\n<\/tr>\n

\n

MMC: 1.81%<\/p>\n<\/td>\n

\n

MS: 2.31%<\/p>\n<\/td>\n

\n

BLK: 1.89%<\/p>\n<\/td>\n

\n

MS: 2.09%<\/p>\n<\/td>\n<\/tr>\n

\n

PGR: 1.78%<\/p>\n<\/td>\n

\n

PGR: 2.24%<\/strong><\/p>\n<\/td>\n

\n

AXP: 1.81%<\/p>\n<\/td>\n

\n

BLK: 2.08%<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

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