Should You Invest in the iShares U.S. Financial Services ETF (IYG)?

The iShares U.S. Financial Services ETF (IYG) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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 5, placing it in top 31%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.71 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Broad segment of the equity market. IYG seeks to match the performance of the Dow Jones U.S. Financial Services Index before fees and expenses.

The Dow Jones U.S. Financial Services Index measures the performance of the financial services 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 0.39%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.14%.

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, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 15.48% of total assets, followed by Jpmorgan Chase & Co (JPM) and Visa Inc Class A (V).

The top 10 holdings account for about 63.16% of total assets under management.

Performance and Risk

The ETF has gained about 4.85% so far this year and is up roughly 27.13% in the last one year (as of 06/18/2025). In that past 52-week period, it has traded between $64.20 and $84.81.

The ETF has a beta of 1.09 and standard deviation of 20.20% for the trailing three-year period, making it a high risk choice in the space. With about 106 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Financial Services 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, IYG 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.

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 $11.86 billion in assets, Financial Select Sector SPDR ETF has $48.61 billion. VFH has an expense ratio of 0.09% 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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This article originally published on Zacks Investment Research (zacks.com).

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