Vanguard's VFH or First Trust's FTXO: Which Financial Sector ETF Belongs in Your Portfolio?
Key Points
Vanguard Financials ETF provides significantly more diversified exposure than First Trust Nasdaq Bank ETF.
The Vanguard fund is substantially more cost-effective with an expense ratio of 0.09% versus 0.6% for the First Trust fund.
First Trust Nasdaq Bank ETF is exclusively focused on the banking sector while Vanguard Financials ETF includes insurance and payment processor companies.
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Investors choosing between Vanguard Financials ETF (NYSEMKT:VFH) and First Trust Nasdaq Bank ETF (NASDAQ:FTXO) are weighing a broad-market financial services portfolio against a concentrated, factor-weighted bet on the banking industry.
While both funds target the financial sector, they differ significantly in their scope and risk profiles. The Vanguard fund offers a massive, multi-industry basket, whereas the First Trust fund uses a liquidity- and volatility-weighted index to select a smaller group of U.S. banks.
Snapshot (cost & size)
| Metric | FTXO | VFH |
|---|---|---|
| Issuer | First Trust | Vanguard |
| Share price | $41.78 (as of 2026-07-02) | $136.18 (as of 2026-07-02) |
| Expense ratio | 0.6% | 0.09% |
| 1-yr return (as of 2026-07-02) | 23.9% | 8.0% |
| Dividend yield | 1.7% | 1.7% |
| Beta | 0.90 | 0.91 |
| AUM | $303.3 million | $13.5 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 Vanguard Financials ETF is the more affordable option, charging just 0.09% compared to the 0.6% expense ratio for the First Trust Nasdaq Bank ETF. Both funds currently offer an identical 1.7% dividend yield.
Performance & risk comparison
| Metric | FTXO | VFH |
|---|---|---|
| Max drawdown (5 yr) | (46.6%) | (25.7%) |
| Growth of $1,000 over 5 years (total return) | $1,529 | $1,658 |
What's inside
Vanguard Financials ETF tracks a broad index of financial firms, holding 404 positions. Its largest positions include JPMorgan Chase (NYSE:JPM) at 9.15%, Berkshire Hathaway (NYSE:BRKB) at 8.06%, and Mastercard (NYSE:MA) at 4.94%. Its portfolio is composed of 97% financial services, 2% technology, and 1% real estate. It was launched in 2004. Vanguard Financials ETF has paid $2.32 per share over the trailing 12 months, which on its recent ~$136.2 share price works out to a 1.7% yield.
First Trust Nasdaq Bank ETF holds 42 positions and is 100% focused on financial services. Its largest positions include Citigroup (NYSE:C) at 8.87%, Bank of America (NYSE:BAC) at 8.23%, and JPMorgan Chase (NYSE:JPM) at 7.78%. It mirrors the Nasdaq US Smart Banks Index, which selects securities based on volatility, value, and growth factors. It was launched in 2016. First Trust Nasdaq Bank ETF has paid $0.73 per share over the trailing 12 months, which on its recent ~$41.8 share price works out to a 1.7% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The financial sector is not a single story. Banks, insurers, payment networks, and asset managers all carry the financials label but respond to economic conditions in completely different ways. That distinction is at the heart of this comparison.
VFH owns the entire U.S. financial sector, spanning every corner of the industry. Berkshire Hathaway, JPMorgan, and Mastercard sit alongside regional banks, insurers, and financial services firms in a broadly diversified portfolio that captures the full sweep of American finance at a very low cost.
FTXO narrows its focus to banking specifically, using a factor-based selection process that gravitates toward the largest U.S. banks. That concentration has delivered strong recent returns when megabanks outperform, but leaves investors with no exposure to the payment networks, insurers, and asset managers that often lead the sector in other environments.
VFH charges a fraction of what FTXO does, a gap that is hard to justify given VFH's broader diversification and longer track record. For most long-term investors, VFH is the stronger foundation. FTXO appeals to those making a deliberate, high-conviction bet on megabank outperformance specifically.
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Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. 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, and Mastercard. The Motley Fool has a disclosure policy.
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