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Should You Invest in the iShares U.S. Financial Services ETF (IYG)?

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The iShares U.S. Financial Services ETF (IYG - Free Report) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Broad segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.17 billion, making it one of the average sized ETFs attempting to match the performance of the Financials - Broad segment of the equity market. IYG seeks to match the performance of the Dow Jones U.S. Financial Services Index before fees and expenses.

The Dow Jones U.S. Financial Services Index measures the performance of the financial services sector of the U.S. equity market.


When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.21%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector--about 80% of the portfolio, followed by Information Technology.

Looking at individual holdings, Jpmorgan Chase & Co (JPM - Free Report) accounts for about 11.29% of total assets, followed by Visa Inc Class A (V - Free Report) and Mastercard Inc Class A (MA - Free Report) .

The top 10 holdings account for about 54.28% of total assets under management.

Performance and Risk

So far this year, IYG has lost about -6.31%, and is down about -19.53% in the last one year (as of 03/23/2023). During this past 52-week period, the fund has traded between $140.77 and $187.50.

The ETF has a beta of 1.18 and standard deviation of 28.81% for the trailing three-year period, making it a high risk choice in the space. With about 109 holdings, it effectively diversifies company-specific risk.


IShares U.S. Financial Services ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IYG is a sufficient option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $7.79 billion in assets, Financial Select Sector SPDR ETF has $29.13 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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