XLF vs IYF: Which Financial Sector ETF Offers Better Value?
Key Points
State Street Financial Select Sector SPDR ETF offers a significantly lower expense ratio than iShares U.S. Financials ETF.
iShares U.S. Financials ETF provides broader diversification with 141 holdings compared to the 76 positions in the State Street fund.
State Street Financial Select Sector SPDR ETF manages over $56.3 billion in assets under management (AUM), offering much higher liquidity.
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State Street Financial Select Sector SPDR ETF (NYSEMKT:XLF) and iShares U.S. Financials ETF (NYSEMKT:IYF) both provide exposure to the financial sector, but they differ significantly in cost, liquidity, and portfolio breadth.
While both funds focus on U.S. financial companies, the State Street fund targets a narrower subset of large-cap firms from the S&P 500, whereas the iShares fund offers a more expansive view of the domestic financial industry by including a wider range of market capitalizations.
Snapshot (cost & size)
| Metric | IYF | XLF |
|---|---|---|
| Issuer | iShares | SPDR |
| Share price | $134.82 (as of 2026-08-20) | $56.95 (as of 2026-08-20) |
| Expense ratio | 0.38% | 0.08% |
| 1-yr return (as of 2026-08-20) | 11.1% | 9.4% |
| Dividend yield | 1.4% | 1.4% |
| Beta | 0.89 | 0.85 |
| AUM | $4.2B | $56.3B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
State Street Financial Select Sector SPDR ETF is the more affordable choice, featuring a 0.08% expense ratio compared to 0.38% for iShares U.S. Financials ETF. Both funds currently offer an identical dividend yield of 1.4%.
Performance & risk comparison
| Metric | IYF | XLF |
|---|---|---|
| Max drawdown (5 yr) | (25.1%) | (25.8%) |
| Growth of $1,000 over 5 years (total return) | $1,753 | $1,648 |
What's inside
State Street Financial Select Sector SPDR ETF concentrates its portfolio on 76 holdings, focusing on Financial Services at 98% and Technology at 2%. Its largest positions include JPMorgan Chase (NYSE:JPM) at 11.72%, Berkshire Hathaway Inc Cl B (NYSE:BRKB) at 11.34%, and Visa Inc Class A Shares (NYSE:V) at 7.56%. It was launched in 1998. State Street Financial Select Sector SPDR ETF has paid $0.81 per share over the trailing 12 months, which on its recent ~$56.95 share price works out to a 1.4% yield.
In contrast, iShares U.S. Financials ETF provides broader exposure with 141 holdings, leaning 99% into Financial Services and 1% into Real Estate. Its top holdings include JPMorgan Chase at 11.21%, Berkshire Hathaway Inc Class B at 11.06%, and Bank Of America (NYSE:BAC) at 4.39%. It was launched in 2000. iShares U.S. Financials ETF has paid $1.92 per share over the trailing 12 months, which on its recent ~$134.82 share price works out to a 1.4% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
These are two strong financial sector ETFs, but one stands out as the better buy.
I would give the edge to the iShares U.S. Financials ETF, which tracks large and mid-cap stocks within the Russell 1000. The ETF also has certain caps in place to keep it even more diversified.
The State State ETF is a more concentrated portfolio that tracks an index comprising a representative group of large-cap financial sector stocks within the S&P 500. In that sense, it is less diversified than the iShares U.S. Financials ETF.
Both ETFs have similar distribution yields of 1.4%, but the iShares ETF has better returns over the 1-, 3-, and 5-year periods. The two ETFs have posted similar average annualized returns over the past 10 years.
However, the State Street ETF is far cheaper, with a low expense ratio of 0.08%-0.38%, compared with the iShares ETF's 0.38%. Still, the broader diversification and returns of the iShares ETF make it a better buy.
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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Visa. The Motley Fool has a disclosure policy.
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