Designed to provide broad exposure to the Financials - Broad segment of the equity market, the Vanguard Financials ETF (VFH) is a passively managed exchange traded fund launched on January 26, 2004.
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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 Vanguard. It has amassed assets over $13.54 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.53%.
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 100% of the portfolio.
Looking at individual holdings, Jpmorgan Chase & Co (JPM) accounts for about 9.76% of total assets, followed by Berkshire Hathaway Inc (BRK/B) and Mastercard Inc (MA).
Performance and Risk
The ETF has added about 16.33% and it's up approximately 16.05% so far this year and in the past one year (as of 12/24/2025), respectively. VFH has traded between $104.87 and $135.28 during this last 52-week period.
The ETF has a beta of 0.99 and standard deviation of 17.38% for the trailing three-year period, making it a medium risk choice in the space. With about 421 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 an outstanding 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.
iShares MSCI Europe Financials ETF (EUFN) tracks MSCI Europe Financials Index and the State Street Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. iShares MSCI Europe Financials ETF has $4.55 billion in assets, State Street Financial Select Sector SPDR ETF has $53.85 billion. EUFN has an expense ratio of 0.48%, and XLF charges 0.08%.
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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Vanguard Financials ETF (VFH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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