The Vanguard Financials ETF (VFH) was launched on 01/26/2004, 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 5, placing it in top 31%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $10.17 billion, making it one of the largest ETFs attempting to match the performance of the Financials - Broad segment of the equity market. VFH seeks to match the performance of the MSCI US Investable Market Financials 25/50 Index before fees and expenses.

The MSCI US Investable Market Index (IMI)/Financials 25/50 measures the investment return of stocks in the financial sector.

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 0.10%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.78%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.

Looking at individual holdings, Jpmorgan Chase & Co (JPM) accounts for about 8.63% of total assets, followed by Berkshire Hathaway Inc (BRK/B) and Mastercard Inc (MA).

Performance and Risk

Year-to-date, the Vanguard Financials ETF has gained about 20.78% so far, and it's up approximately 40.09% over the last 12 months (as of 10/09/2024). VFH has traded between $75.97 and $111.21 in this past 52-week period.

The ETF has a beta of 1.08 and standard deviation of 19.35% for the trailing three-year period, making it a medium risk choice in the space. With about 406 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Financials ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VFH is a great option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.