ETF Talk

Vanguard’s Powerhouse Buy-and-Hold Financial Fund

With total assets under management of $5.7 billion, the Vanguard Financials ETF (VFH) is a powerhouse exchange-traded fund (ETF) managed by the Vanguard Group, a giant American investment firm.

Unlike many of its peers, VFH is passively managed, so it employs an indexing strategy that fully replicates the MSCI U.S. Investable Market Financials 25/50 index. That index includes financial stocks in the top 98% of the U.S. market by capitalization. With VFH investing at least 90% of its total assets in this benchmark index, the fund offers excellent exposure to the broader financial market.

On the surface, VFH may not seem very different from other large financial sector funds, such as the Financial Select Sector SPDR ETF (XLF). However, with over 400 holdings in total, VFH offers considerably greater depth of exposure to the financial market than many of its peer funds, most of which have fewer than 100 holdings each. VFH is non-diversified.

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