This Financial ETF Trounced the S&P 500 Last Year, and Arlington Capital Management Just Opened a 126,000-Share Position

What happened

According to an SEC filing dated Jan. 6, 2026, Arlington Capital Management, Inc. reported the purchase of 125,717 shares of iShares MSCI Europe Financials ETF (NASDAQ:EUFN). The estimated transaction value was $4.66 million, calculated using the average share price during the quarter. The stake was initiated during the reporting period.

What else to know

• This was a new position for Arlington, representing 2.9% of its 13F reportable assets under management as of December 31, 2025.
• Top holdings after the filing:
  • NYSEMKT: IAU: $16.06 million (9.9% of AUM)
  • NASDAQ: NVDA: $12.97 million (8.0% of AUM)
  • NASDAQ: TLT: $8.61 million (5.3% of AUM)
  • NYSEMKT: GDX: $6.01 million (3.7% of AUM)
  • NYSEMKT: EPOL: $5.51 million (3.4% of AUM)
• As of January 5, 2026, EUFN shares were priced at $37.81, up 62.41% over the past year and outpacing the S&P 500 by 46.26 percentage points.
• EUFN’s annualized dividend yield was 3.5% as of January 6, 2026, with shares priced 0.8% below their 52-week high.

ETF overview

ETF snapshot

• Investment strategy seeks to track the MSCI Europe Financials Index, providing exposure to developed European financial sector equities.
• Structured as an exchange-traded fund (ETF) with a passive, index-based approach and listed on the NASDAQ exchange.
• Offers a 3.5% dividend yield as of January 6, 2026, appealing to income-focused investors.

iShares MSCI Europe Financials ETF offers investors targeted access to the European financial sector through a diversified basket of equities. The fund's strategy leverages a transparent, rules-based index methodology to ensure broad representation of the region's leading financial firms. With a 3.5% dividend yield as of Jan. 6, 2026, EUFN may appeal to investors seeking sector-specific exposure within developed European markets.

What this transaction means for investors

The iShares MSCI Europe Financials ETF provides investors a basket of stocks in the European financials sector. The ETF's top holdings are HSBC, Banco Santander, Allianz, and UBS Group and it has an expense ratio of 0.49%.

This targeted ETF holds just shy of 100 stocks and has trounced the S&P 500 over the past year, returning an impressive 69% as of Jan. 5. Its 3.5% dividend yield also bests the average yield of the S&P 500, which is around 1.2%. The ETF focuses on financial stocks in developed European markets, which tend to be safe, established businesses. Common pitfalls of bank stocks include cyclicality, interest rate fluctuations, and default risk.

Questions around interest rates, the regulatory landscape, and the overall economy may be leading some retail and institutional investors to seek diversification away from the U.S. financial sector. With its initiation of EUFN stock, Arlington Capital Management has made it its 10th-largest position, worth just shy of 3% of its total assets under management as of the latest SEC report.

Glossary

Assets under management (AUM): The total market value of all assets a fund or investment manager oversees.

ETF (exchange-traded fund): An investment fund traded on stock exchanges, holding a diversified portfolio of assets.

Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its price.

Passive, index-based approach: Investment strategy aiming to replicate the performance of a specific market index, not actively selecting securities.

13F reportable assets: Securities that institutional investment managers must disclose quarterly to the Securities and Exchange Commission (SEC) if managing over $100 million.

Quarter-end position: The value or amount of a holding in a portfolio at the end of a financial quarter.

Sector-specific exposure: Investment focused on a particular industry or sector, rather than the broader market.

Annualized: Converted to a yearly rate based on data from a shorter period, allowing comparison across timeframes.

Top holdings: The largest investments within a fund or portfolio, typically by market value.

Rules-based index methodology: A transparent, predetermined set of rules used to select and weight securities in an index.

1-year total return: The overall gain or loss, including price changes and dividends, over the past year.

Stake: The ownership interest or investment held in a particular security or fund.

HSBC Holdings is an advertising partner of Motley Fool Money. Sarah Sidlow has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.