XLF vs VFH: The Two Best Financials ETFs — Nearly Identical at the Top
XLF and VFH are both dominated by JPMorgan, Berkshire Hathaway, and Visa. VFH adds mid-cap banks and regional lenders; XLF stays in S&P 500 territory. Both are very cheap.
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 0.09%. 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.
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.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 XLF vs VFH: Key Facts Side by Side
| Metric | XLF | VFH |
|---|---|---|
| Fund Name | State Street Financial Select Sector SPDR ETF | Vanguard Financials Index Fund ETF Shares |
| Issuer | State Street | Vanguard |
| Tracks Index | Financial Select Sector Index | MSCI US IMI Financials 25/50 |
| Expense Ratio | 0.09% | 0.09% |
| Cost per $10K/yr | $9.00 | $9.00 |
| AUM | $51.0B | $13.8B |
| Holdings | 74 | 400 |
| Inception | 1998 | 2004 |
| 1-Year Return | +3.40% | +3.25% |
| 3-Year Return | +20.27% | +20.81% |
| 5-Year Return | +9.26% | +9.20% |
| Dividend Yield | 1.55% | 1.81% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.00% | 0.01% |
AUM and returns updated Oct 14, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 XLF vs VFH: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- already use State Street and prefer staying within one fund family
- want broader diversification (400 holdings vs 74)
- already use Vanguard and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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