IYF vs. FNCL: Which Financials ETF Is the Better Buy?
Key Points
iShares U.S. Financials ETF (IYF) has delivered stronger total returns over both the past one and five years than the Fidelity MSCI Financials Index ETF (FNCL).
IYF charges a lower expense ratio than FNCL.
FNCL spreads its assets across nearly 400 holdings, while IYF concentrates on just 142 -- giving investors two different levels of diversification within the same corner of the market.
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The iShares U.S. Financials ETF (NYSEMKT:IYF) offers a relatively more concentrated portfolio of industry leaders and boasts higher recent returns, while the Fidelity MSCI Financials Index ETF (NYSEMKT:FNCL) provides broader sector exposure with a significantly lower expense ratio.
Both funds aim to give investors exposure to the U.S. financial sector, including banks, insurers, and asset managers. While they overlap on many of their largest positions, their underlying indexes create different levels of diversification.
Snapshot (cost & size)
| Metric | FNCL | IYF |
|---|---|---|
| Issuer | Fidelity | iShares |
| Expense ratio | 0.08% | 0.38% |
| 1-year return (as of Aug. 12, 2026) | 12.20% | 13.62% |
| Dividend yield | 1.56% | 1.42% |
| Beta | 0.80 | 0.80 |
| AUM | $2.4 billion | $4.4 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-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
FNCL is the cheaper option, with a 0.08% expense ratio compared to IYF's 0.38%. FNCL also offers a slightly higher dividend yield.
Performance & risk comparison
| Metric | FNCL | IYF |
|---|---|---|
| Max drawdown (5 yr) | (25.68%) | (25.05%) |
| Growth of $1,000 over 5 years (total return) | $1,664 | $1,768 |
Despite its higher price tag, IYF has outpaced FNCL in total returns over both the last one-year and five-year periods. That's a reminder that a lower expense ratio doesn't automatically translate into better performance -- what a fund actually owns, and how concentrated those holdings are, play a larger role in returns than fees alone.
What's inside
Launched in 2000, IYF holds 142 stocks across the U.S. financial sector -- a diversified portfolio in its own right, though narrower than FNCL's. IYF's largest positions include Berkshire Hathaway (NYSE:BRKB) at 11.4%, JPMorgan Chase & Co (NYSE:JPM) at 11.2%, and Bank of America Corp (NYSE:BAC) at 4.7%.
FNCL casts an even wider net with 387 holdings, helping reduce individual stock risk. Top holdings include JPMorgan Chase & Co at 10.5%, Berkshire Hathaway at 7.8%, and Visa (NYSE:V) at 6.8%. FNCL was launched in 2013.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
IYF's stronger returns over the past one and five years make sense given its portfolio construction -- with more than 20% of assets tied up in Berkshire Hathaway and JPMorgan Chase alone, the fund leans more heavily on a core group of financial giants that have outperformed the broader sector lately. 142 holdings is still a well-diversified fund by most standards, just less diversified than FNCL specifically. The trade-off is that IYF is somewhat more sensitive to the performance of its largest names.
FNCL takes a broader approach. Its 387 holdings and rock-bottom 0.08% expense ratio make it a lower-cost way to own the financial sector -- including smaller regional banks and insurers -- with less reliance on any individual company. That extra diversification hasn't translated into better returns recently, but it's a more evenly distributed way for investors to gain sector exposure without leaning quite as heavily on a handful of megacap names.
Neither fund is a bad choice -- the better pick really depends on whether an investor prefers IYF's somewhat tighter focus on financial-sector leaders or FNCL's lower-cost, broader diversification for the long haul.
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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 and Visa. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Visa. The Motley Fool has a disclosure policy.
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