🤝 BFF Take
VFH Is Broader — XLF Has Larger Trading Volume and Options Depth
XLF (Financial Select Sector SPDR) and VFH (Vanguard Financials ETF) are the two dominant US financials sector ETFs. XLF holds 74 S&P 500 financial companies — JPMorgan, Berkshire Hathaway, Visa, Mastercard, and Bank of America dominate. VFH holds ~400 companies including mid-cap regional banks, insurance companies, and financial services firms not in the S&P 500. Both are extremely cheap: XLF at 0.09%, VFH at 0.10%. XLF trades $2B+ daily with deep options liquidity — ideal for tactical traders and hedgers. VFH's broader exposure includes more regional bank coverage, which can outperform in certain rate environments. For most long-term investors, both work fine; VFH's breadth is a slight advantage.
📋 Quick Takeaways
🏦XLF holds 74 S&P 500 financials; VFH holds ~400 — more mid-cap banks and regional lender exposure in VFH
💰XLF costs 0.09%; VFH costs 0.10% — effectively identical; choose based on trading needs vs breadth preference
📈Top holdings are near-identical — JPMorgan, Berkshire Hathaway, Visa, Mastercard dominate both funds
📊 Data-Based Take: VFH has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
XLF
Financial Select Sector SPDR Fund
VFH
Vanguard Financials ETF
📋 XLF vs VFH — Key Facts Side by Side
| Metric |
XLF |
VFH |
| Fund Name |
Financial Select Sector SPDR Fund |
Vanguard Financials ETF |
| Issuer |
State Street |
Vanguard |
| Tracks Index |
Financial Select Sector Index |
MSCI US IMI Financials 25/50 |
| Expense Ratio |
0.09% ✓ |
0.10% |
| Cost per $10K/yr |
$9.00 |
$10.00 |
| AUM |
$44B |
$10B |
| Holdings |
74 |
400 |
| Inception |
1998 |
2004 |
| 1-Year Return |
+22.40% |
+23.80% |
| 3-Year Return |
+10.80% |
+11.60% |
| 5-Year Return |
+13.60% |
+14.20% |
| Avg Bid-Ask Spread |
0.00% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 XLF vs VFH — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy XLF or VFH?
Choose if...
XLF
- You want the lowest fees — saves ~$1/yr per $10K vs VFH
- You already use State Street and prefer staying within their fund family
Choose if...
VFH
- You want broader diversification (400 holdings vs 74)
- You already use Vanguard and prefer staying within their fund family
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❓ XLF vs VFH — Frequently Asked Questions
Is XLF or VFH better?
Both are excellent financials ETFs at essentially the same cost. VFH's broader index (400 vs 74 holdings) provides better coverage of the full financial sector including regional banks, insurance companies, and specialty finance firms. XLF's massive trading volume ($2B+ daily) makes it the preferred vehicle for institutional options and hedging strategies. For buy-and-hold investors, VFH's additional breadth adds slight diversification value at the same price.
What is included in financial sector ETFs?
US financials ETFs include: mega-cap banks (JPMorgan, Bank of America, Wells Fargo, Citigroup), payment networks (Visa, Mastercard), investment banks/asset managers (Goldman Sachs, Morgan Stanley, BlackRock), insurance companies (Berkshire Hathaway, Chubb, MetLife), regional banks, and specialty finance/fintech companies. Note that Berkshire Hathaway is classified in financials despite being a conglomerate, making it one of the largest weights in both XLF and VFH.
Does XLF benefit from rising interest rates?
Generally yes — rising rates expand net interest margins for banks (they earn more on loans while deposit costs lag). Bank stocks tend to outperform in rate hiking cycles. However, rapid rate increases can also cause credit quality deterioration and loan demand slowdown. The 2023 regional bank crisis (SVB, Signature Bank) showed that rapid rate hikes can stress smaller banks' bond portfolios. Large-cap banks in XLF and VFH were more resilient; regional bank-heavy KRE was hit harder.
What is KRE and how does it differ from XLF?
KRE (SPDR S&P Regional Banking ETF, 0.35%) focuses specifically on regional banks using equal weighting — very different from XLF's mega-cap tilt. KRE excludes JPMorgan, Berkshire, and Visa and instead concentrates in mid-size regional lenders. KRE is more sensitive to regional credit conditions and the 2023 bank crisis hit KRE much harder than XLF. See our KRE vs XLF comparison for a full breakdown.
What dividend yield do XLF and VFH pay?
Both XLF and VFH typically yield 1.5-2.5% — moderate income from the dividends paid by large banks, insurance companies, and financial services firms. The yield is lower than dedicated dividend ETFs because growth-oriented payment companies (Visa, Mastercard) pay minimal dividends. For higher income from financials, investors sometimes pair XLF with a dividend-focused fund.
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ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.