IAT vs. IYF: Which iShares Financial ETF Is the Better Buy?
Key Points
The iShares U.S. Regional Banks ETF (IAT) offers a higher dividend yield but carries higher concentration risk than the iShares U.S. Financials ETF (IYF).
IYF provides broader exposure to the financial sector and has experienced a lower maximum drawdown over the last five years.
Both funds share an identical 0.38% expense ratio.
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Choosing between the iShares U.S. Regional Banks ETF (NYSEMKT:IAT) and the iShares U.S. Financials ETF (NYSEMKT:IYF) comes down to a simple trade-off -- concentrated exposure to regional banking versus broad diversification across the entire financial sector.
IAT focuses strictly on regional banking institutions, while IYF casts a wider net that includes mega-cap banks, insurers, and investment firms. Both funds are managed by iShares and have identical management fees, so the decision really hinges on how much sector-specific risk an investor is willing to take on.
Snapshot (cost & size)
| Metric | IAT | IYF |
|---|---|---|
| Expense ratio | 0.38% | 0.38% |
| 1-year return (as of July 13, 2026) | 24.89% | 11.61% |
| Dividend yield | 2.60% | 1.50% |
| Beta | 1.23 | 0.82 |
| AUM | $656.0 million | $3.9 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both funds charge an identical 0.38% expense ratio, so cost isn't a differentiator here. When it comes to income, however, there’s a clear winner: IAT pays a 2.6% dividend yield, well above the 1.4% offered by IYF.
Performance & risk comparison
| Metric | IAT | IYF |
|---|---|---|
| Max drawdown (5 yr) | (55.53%) | (25.05%) |
| Growth of $1,000 over 5 years (total return) | $1,298 | $1,766 |
IAT's concentration in regional banks has historically made it far more volatile than IYF, including a maximum drawdown of more than 55% during past banking-sector stress. IYF's broader mix of banks, insurers, and asset managers has helped cushion it from the kind of sharp swings that hit regional lenders hardest, resulting in comparatively lower volatility and shallower drawdowns over time.
What's inside
Launched in 2000, IYF tracks a broad basket of financial services companies, spread across 142 holdings. Its top positions include Berkshire Hathaway (NYSE:BRKB) at 11.7%, JPMorgan Chase (NYSE:JPM) at 11.0%, and Bank of America (NYSE:BAC) at 4.6%.
IAT, by contrast, is a pure-play bet on regional banking with just 31 holdings. Its top positions -- PNC Financial Services Group (NYSE:PNC) at 15.0%, U.S. Bancorp (NYSE:USB) at 14.2%, and Truist Financial Corp (NYSE:TFC) at 9.4% -- make up a much larger share of the fund than IYF's top holdings do. IAT was launched in 2006.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
This comparison is really a question of how much conviction an investor has in regional banks. Regional lenders tend to be more sensitive to local economic conditions, interest-rate swings, and credit-quality concerns than the diversified giants that dominate IYF -- think Berkshire Hathaway and JPMorgan Chase, companies with multiple business lines that can offset weakness in any one area. That's a big part of why IAT has historically seen much deeper drawdowns than IYF.
That doesn’t make IAT a bad choice -- higher risk often comes with higher potential reward, and you get a higher dividend yield with IAT as well. But investors who want financial-sector exposure without betting heavily on the health of regional lenders may prefer IYF's broader mix of banks, insurers, and asset managers.
This comparison is also a useful reminder that not all financial sector ETFs are created equal. A fund's concentration -- not just its sector classification -- often tells you more about what kind of ride you're signing up for. Investors who are seeking income and comfortable with volatility may lean toward IAT, while those prioritizing stability might find IYF the more comfortable fit.
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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. Andy Gould has positions in Berkshire Hathaway, Truist Financial, and U.S. Bancorp. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, Truist Financial, and U.S. Bancorp. The Motley Fool has a disclosure policy.
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