Fidelity's FNCL or iShares' IAT: Which Financial ETF Is the Better Long-Term Buy?
Key Points
Fidelity MSCI Financials Index ETF offers a significantly lower expense ratio of 0.08% compared to the iShares fund.
iShares U.S. Regional Banks ETF provides concentrated exposure to the banking industry, while the Fidelity fund spans the broad financial sector.
Fidelity MSCI Financials Index ETF has delivered higher 5-year total returns with a significantly lower maximum drawdown.
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Fidelity MSCI Financials Index ETF (NYSEMKT:FNCL) offers broad, low-cost exposure to the financial sector, whereas the iShares U.S. Regional Banks ETF (NYSEMKT:IAT) provides concentrated access specifically to U.S. regional lenders.
Investors choosing between these funds may consider the trade-off between industry specificity and broad sector diversification. While both target financial services, iShares U.S. Regional Banks ETF zeroes in on a niche segment, whereas Fidelity MSCI Financials Index ETF encompasses everything from mega-banks to insurance and payment processors.
Snapshot (cost & size)
| Metric | IAT | FNCL |
|---|---|---|
| Issuer | iShares | Fidelity |
| Share price | $65.33 (as of 2026-08-13) | $83.07 (as of 2026-08-13) |
| Expense ratio | 0.37% | 0.08% |
| 1-yr return (as of Aug. 13, 2026) | 30.7% | 12.5% |
| Dividend yield | 2.5% | 1.5% |
| Beta | 0.88 | 0.89 |
| AUM | $0.7 billion | $2.4 billion |
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.
Fidelity MSCI Financials Index ETF is significantly more affordable with an expense ratio of 0.08%, compared to the 0.37% charged by iShares U.S. Regional Banks ETF. However, iShares U.S. Regional Banks ETF offers a higher trailing payout for income-focused investors, resulting in a 1.0 percentage point yield gap.
Performance & risk comparison
| Metric | IAT | FNCL |
|---|---|---|
| Max drawdown (5 yr) | (55.5%) | (25.7%) |
| Growth of $1,000 over 5 years (total return) | $1,302 | $1,663 |
What's inside
Fidelity MSCI Financials Index ETF provides broad exposure across the financial landscape, including financial services at 97%, technology at 2%, and real estate at 1%. With 404 holdings, its largest positions include JPMorgan Chase (NYSE:JPM) at 10.50%, Berkshire Hathaway (NYSE:BRKB) at 7.60%, and Visa (NYSE:V) at 6.63%. The fund was launched in 2013. Fidelity MSCI Financials Index ETF has paid $1.26 per share over the trailing 12 months, which on its recent ~$83.07 share price works out to a 1.5% yield.
In contrast, iShares U.S. Regional Banks ETF is 100% concentrated in the financial services sector, specifically within the regional banking industry. It maintains a much tighter portfolio of 31 holdings, and its largest positions include PNC Financial Services Group (NYSE:PNC) at 14.82%, US Bancorp (NYSE:USB) at 14.58%, and Truist Financial (NYSE:TFC) at 9.48%. The fund was launched in 2006. iShares U.S. Regional Banks ETF has paid $1.62 per share over the trailing 12 months, which on its recent ~$65.33 share price works out to a 2.5% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Regional banks and the broader financial sector are being driven by completely different forces, and right now they are moving in opposite directions in some important ways. Large banks have surged on investment banking revenues and deal activity. Regional banks, by contrast, are more exposed to commercial real estate stress and slower loan demand in local markets. These pressures have weighed on the sector even as IAT delivered surprisingly strong returns over the past year.
That performance gap between the two funds is worth understanding before choosing between them. FNCL's broad exposure to payment networks, insurers, and asset managers alongside banks has provided a steadier but lower-returning ride. IAT's concentrated bet on regional lenders has been more volatile, with a much deeper historical drawdown that reflects what happens to smaller banks when credit conditions tighten.
FNCL charges less than a fifth of what IAT does, a cost advantage that has historically mattered more in flat or down markets than in strong ones. For most long-term investors who want financial sector exposure without concentrating entirely in regional banking, FNCL is the more practical foundation. IAT is the stronger buy for those with specific conviction in regional bank recovery and who are comfortable accepting higher volatility and fee for a purer play on that theme.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, Truist Financial, U.S. Bancorp, and Visa. The Motley Fool has a disclosure policy.
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