Which Financial ETF Is Better, State Street's XLF or Fidelity's FNCL?
Key Points
The State Street Financial Select Sector SPDR ETF maintains a much larger asset base and higher trading volume than the Fidelity MSCI Financials Index ETF.
The Fidelity MSCI Financials Index ETF offers exposure to around 400 stocks while the State Street Financial Select Sector SPDR ETF concentrates on 76 positions.
Both funds carry an identical expense ratio of 0.08%, though the Fidelity MSCI Financials Index ETF has a slightly higher trailing-12-month dividend yield.
- 10 stocks we like better than Select Sector SPDR Trust - State Street Financial Select Sector SPDR ETF ›
The State Street Financial Select Sector SPDR ETF (NYSEMKT:XLF) provides deep liquidity and concentrated exposure to S&P 500 giants, while the Fidelity MSCI Financials Index ETF (NYSEMKT:FNCL) offers a broader reach across the sector for the same low cost.
Investors looking for exposure to the financial industry often choose between broad market index funds and those that track specific components of the S&P 500. While FNCL and XLF share the same expense ratio, they differ significantly in portfolio depth, asset size, and historical yield payouts.
Snapshot (cost & size)
| Metric | FNCL | XLF |
|---|---|---|
| Issuer | Fidelity | State Street |
| Expense ratio | 0.08% | 0.08% |
| 1-yr return (as of June 23, 2026) | 7.0% | 5.7% |
| Dividend yield | 1.7% | 1.5% |
| Beta | 0.87 | 0.79 |
| AUM | $2.2 billion | $50.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both ETFs are highly cost-efficient with expense ratios of 0.08%. The Fidelity fund provides a slightly higher payout for income-seekers, offering a 1.7% dividend yield compared to the 1.5% yield provided by the State Street fund.
Performance & risk comparison
| Metric | FNCL | XLF |
|---|---|---|
| Max drawdown (5 yr) | (25.7%) | (25.8%) |
| Growth of $1,000 over 5 years (total return) | $1,615 | $1,611 |
What's inside
The State Street Financial Select Sector SPDR ETF (NYSEMKT:XLF) focuses on the financial components of the S&P 500, meaning it targets larger, more established companies. Sector allocation includes financial services at 98%, with banks comprising 29% of this, and technology at 2%. Its largest positions include Berkshire Hathaway at 11.76%, JPMorgan Chase & Co. at 11.66%, and Visa Inc. at 7.12%. Launched in 1998, this ETF holds 76 securities and has a trailing-12-month dividend of $0.98 per share.
In contrast, the Fidelity MSCI Financials Index ETF (NYSEMKT:FNCL) tracks a much broader index, encompassing about 400 holdings across various market capitalizations. Sector allocation includes financial services at 97%, technology at 2%, and real estate at 1%. Top holdings include JPMorgan Chase & Co. at 10.35%, Berkshire Hathaway at 7.91%, and Visa Inc. at 6.39%. Launched in 2013, the Fidelity fund has a trailing-12-month dividend of $1.26 per share, reflecting its inclusion of smaller, different-yielding companies.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investors seeking stocks in the financial sector can efficiently invest through ETFs focused on the industry. Both the Fidelity MSCI Financials Index ETF (FNCL) and State Street Financial Select Sector SPDR ETF (XLF) offer this at a low expense ratio. Choosing between these two depends on which fund’s strategy best aligns with your goals.
XLF only holds shares of financial companies in the S&P 500, which translates into just 76 stocks. This means the fund’s performance is dependent on this limited universe of businesses. Even so, XLF sports many compelling qualities.
It offers the stability of mega-cap stocks such as JPMorgan Chase. This makes XLF a compelling ETF for conservative investors. It also has a far greater AUM, delivering high liquidity and tighter bid-ask spreads.
FNCL casts a wider net, delivering a broader range of stocks in the financial sector. This boosts diversification, reducing reliance on mega-caps, and providing exposure to smaller companies not available through XLF. It also provides a higher dividend yield, which may appeal to income-minded investors.
Pick XLF if you want to focus only on the big financial stocks of the S&P 500. Choose FNCL if you want to invest across the sector, and gain exposure to small and mid-cap stocks along with their bigger brethren.
Should you buy stock in Select Sector SPDR Trust - State Street Financial Select Sector SPDR ETF right now?
Before you buy stock in Select Sector SPDR Trust - State Street Financial Select Sector SPDR ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Select Sector SPDR Trust - State Street Financial Select Sector SPDR ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $387,428!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,221,398!*
Now, it’s worth noting Stock Advisor’s total average return is 895% — a market-crushing outperformance compared to 205% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of June 25, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. Robert Izquierdo has positions in JPMorgan Chase. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Visa. The Motley Fool has a disclosure policy.
Recommended Articles
