VFH vs. XLF: Which Financial ETF Is the Better Buy?

Andy Gould, The Motley Fool

Mon, August 10, 2026 astatine 11:23 AM CDT 4 min read

The State Street Financial Select Sector SPDR ETF (NYSEMKT:XLF) and the Vanguard Financials ETF (NYSEMKT:VFH) some absorption connected financials, but VFH provides importantly broader diversification.

Investors looking for vulnerability to the fiscal assemblage often take betwixt these 2 funds. Both ETFs clasp large banks, insurers, and outgo networks -- but they disagree successful portfolio extent and concentration.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from monthly returns implicit the disposable money past (up to 5 years). The 1-year instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

XLF is somewhat cheaper, with an disbursal ratio of 0.08% compared with VFH's 0.09%. However, VFH offers a higher dividend output of 1.67% -- a 4th of a percent constituent higher than XLF's 1.42%.

Performance & hazard examination

What's wrong

Launched successful 1998, XLF tracks the Financial Select Sector Index, which holds lone the fiscal companies already wrong the S&P 500. The money holds 76 stocks, including apical holdings JPMorgan Chase (NYSE:JPM) astatine 11.7%, Berkshire Hathaway (NYSE:BRKB) astatine 11.7%, and Visa (NYSE:V) astatine 7.6%.

VFH tracks the MSCI US Investable Market Index (IMI)/Financials 25/50 -- a benchmark that goes beyond conscionable the S&P 500 to see mid- and small-cap fiscal companies. The money holds 428 stocks, including apical holdings JPMorgan Chase astatine 9.2%, Berkshire Hathaway Inc astatine 7.8%, and Mastercard Inc (NYSE:MA) astatine 4.7%. VFH was launched successful 2004.

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