European Banks Are Back. FTXO vs. EUFN Forces Investors to Pick a Side.
Key Points
iShares MSCI Europe Financials ETF offers a lower expense ratio and a significantly higher dividend yield than First Trust Nasdaq Bank ETF.
While First Trust Nasdaq Bank ETF focuses exclusively on U.S. banking institutions, iShares MSCI Europe Financials ETF provides diversified exposure across developed European markets.
Over the last five years, iShares MSCI Europe Financials ETF has achieved higher total returns with a less severe maximum drawdown.
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While First Trust Nasdaq Bank ETF (NASDAQ:FTXO) offers concentrated exposure to the U.S. banking sector, iShares MSCI Europe Financials ETF (NASDAQ:EUFN) provides a more diversified, lower-cost, and higher-yielding approach to international financials.
Financial sector investors often choose between a domestic focus and international diversification. FTXO targets smart-beta factors within U.S. banks, while EUFN tracks large- and mid-cap financial companies across developed European markets, including banks, insurers, and asset managers. This comparison examines how their geographic focuses and cost structures differ.
Snapshot (cost & size)
| Metric | FTXO | EUFN |
|---|---|---|
| Issuer | First Trust | iShares |
| Expense ratio | 0.60% | 0.48% |
| 1-yr return (as of June 3, 2026) | 23.40% | 23.10% |
| Dividend yield | 1.80% | 3.50% |
| Beta | 0.90 | 0.79 |
| AUM | $281.1 million | $3.6 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.
The iShares fund is more affordable for long-term holders with its 0.49% expense ratio. It also provides a higher payout for income-seeking investors, with a distribution yield of 3.50% compared to the 1.80% yield offered by the First Trust fund.
Performance & risk comparison
| Metric | FTXO | EUFN |
|---|---|---|
| Max drawdown (5 yr) | (46.60%) | (35.20%) |
| Growth of $1,000 over 5 years (total return) | $1,297 | $2,235 |
What's inside
iShares MSCI Europe Financials ETF holds around 100 positions primarily in the financial services sector, which represents 97% of the fund alongside small allocations to technology and cash. Its largest positions include HSBC Holdings (LSE:HSBA.L) at 9.63%, Banco Santander (BME:SAN.MC) at 5.35%, and Allianz (XETRA:ALV.DE) at 5.00%. Launched in 2010, the iShares fund has a trailing-12-month dividend of $1.33 per share.
First Trust Nasdaq Bank ETF maintains a narrower portfolio of around 50 holdings entirely focused on U.S. financial services. Its largest positions include Citigroup (NYSE:C) at 9.08%, Bank of America (NYSE:BAC) at 8.03%, and JPMorgan Chase (NYSE:JPM) at 7.64%. Launched in 2016, the First Trust fund has a trailing-12-month dividend of $0.68 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
For most of the past decade, U.S. banks were the clear winners. European banks languished under negative interest rates, heavy regulation, and depressed valuations. But that picture has changed significantly. European banks entered their recent rally trading at deep discounts to book value, reflecting years of subdued returns. Rising rates, stronger capital positions, and increased shareholder payouts drove a historic rebound.
At the same time, U.S. banks face their own set of opportunities. Deregulation, AI investment, and strong wealth management revenues continue to support the case for domestic financial giants.
The choice between FTXO and EUFN is ultimately a geographic conviction call. If you believe U.S. megabanks will reassert their long-term dominance, particularly if deregulation accelerates and domestic deal activity picks up, FTXO is the obvious choice. EUFN is the fund for those who see a continued runway in European financials. One additional consideration for U.S.-based investors: EUFN introduces currency risk. A strengthening euro amplifies returns, but a reversal would work against them. For investors whose portfolios are heavily weighted toward U.S. assets, EUFN also offers something FTXO cannot: genuine geographic diversification within the financial sector.
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Sara Appino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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