5 Best Financial and Fintech ETFs To Buy

In this article, we discuss 5 best financial and fintech ETFs to buy. If you want to read our discussion on the finance industry, head directly to 12 Best Financial and Fintech ETFs To Buy. 

5. iShares U.S. Financial Services ETF (NYSE:IYG)

5-Year Share Price Performance as of March 22: 56.78%

iShares U.S. Financial Services ETF (NYSE:IYG) aims to mirror the performance of the Dow Jones U.S. Financial Services Index, which consists of American equities within the financial services sector. The fund offers exposure to different entities including U.S. investment banks, commercial banks, asset managers, credit card companies, and securities exchanges. The ETF was established on June 12, 2000. iShares U.S. Financial Services ETF (NYSE:IYG) features an expense ratio of 0.40% and net assets of $1.3 billion as of March 22, 2024. It is one of the best financial ETFs to invest in. 

Berkshire Hathaway Inc. (NYSE:BRK-B) is the largest holding of the iShares U.S. Financial Services ETF (NYSE:IYG). On February 24, Berkshire Hathaway Inc. (NYSE:BRK-B) reported a Q4 EPS of $3.92 and a revenue of $93.38 billion, outperforming Wall Street estimates by $0.12 and $12.69 billion, respectively. 

According to Insider Monkey’s fourth quarter database, 117 hedge funds were bullish on Berkshire Hathaway Inc. (NYSE:BRK-B), compared to 116 funds in the last quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with nearly 20 million shares worth $7.10 billion.  

Here is what Black Bear Value Fund has to say about Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q3 2022 investor letter:

“Going forward I expect Berkshire to compound at above average returns from this price. BRK is a collection of high-quality businesses, excellent management, and a good amount of optionality in their cash position. If the cash were to be deployed accretively, the true value would be greater than an 8% premium (as mentioned above). The combination of a pie that is growing, an increasing share of said pie due to stock buybacks, upside optionality from cash and a tight range of likely business outcomes that span a variety of economic futures gives me comfort in continuing to own Berkshire.”

4. iShares U.S. Financials ETF (NYSE:IYF)

5-Year Share Price Performance as of March 22: 58.76%

iShares U.S. Financials ETF (NYSE:IYF) aims to replicate the performance of the Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index, comprising US equities within the financial sector. It provides exposure to different entities such as US banks, insurers, and credit card companies. As of March 22, 2024, the fund had $2.56 billion in net assets, along with an expense ratio of 0.40% and a portfolio of 138 stocks. iShares U.S. Financials ETF (NYSE:IYF) is one of the best financial ETFs to buy. 

Bank of America Corporation (NYSE:BAC) is one of the top holdings of iShares U.S. Financials ETF (NYSE:IYF). On January 31, Bank of America Corporation (NYSE:BAC) declared a quarterly dividend of $0.24 per share, in line with previous. The dividend is payable on March 29, to shareholders on record as of March 1. 

According to Insider Monkey’s fourth quarter database, 96 hedge funds were bullish on Bank of America Corporation (NYSE:BAC), up from 88 funds in the prior quarter. 

Sequoia Fund stated the following regarding Bank of America Corporation (NYSE:BAC) in its fourth quarter 2023 investor letter:

“Exits last year included Netflix, Bank of America Corporation (NYSE:BAC) and Micron. As discussed in our Q1 shareholder letter, we exited our investment in Bank of America soon after making it, as our thesis was quickly undermined by the regional banking crisis and the regulatory developments that it catalyzed. We think both Bank of America and Micron were purchased at conservative prices given the facts at hand, but the facts changed and we moved on.”

3. Financial Select Sector SPDR Fund (NYSE:XLF)

5-Year Share Price Performance as of March 22: 61.10%

Financial Select Sector SPDR Fund (NYSE:XLF) ranks 3rd on our list of the best financial ETFs. Financial Select Sector SPDR Fund (NYSE:XLF) aims to match the performance of the Financial Select Sector Index. This index provides exposure to companies across multiple financial sectors including financial services, insurance, banks, capital markets, mortgage real estate investment trusts, and consumer finance. The fund was established on December 16, 1998. The fund features a gross expense ratio of 0.09%, along with $38 billion in assets under management as of March 21, 2024. Its portfolio consists of 71 stocks. 

Visa Inc. (NYSE:V) is one of the top holdings of the Financial Select Sector SPDR Fund (NYSE:XLF). On March 12, Visa Inc. (NYSE:V) and Taulia, a fintech company specializing in working capital management solutions, announced that they have collaborated to enhance business-to-business (B2B) payments. By integrating Visa’s digital payments technology into Taulia Virtual Cards, which integrates with SAP enterprise resource planning systems, the partnership aims to create a smoother payments experience for both buyers and suppliers. 

According to Insider Monkey’s fourth quarter database, 162 hedge funds were long Visa Inc. (NYSE:V), compared to 167 funds in the last quarter. Chris Hohn’s TCI Fund Management is the largest stakeholder of the company, with 16.8 million shares worth $4.37 billion. 

In its October 2023 investor letter, Lakehouse Capital stated the following regarding Visa Inc. (NYSE:V):

“Visa Inc. (NYSE:V) reported a strong result with net revenue increasing 11% year-on-year to $8.6 billion and non-GAAP earnings per share increasing by 21% to $2.33. As has been the case for many years now, the scalable nature of the business allows for revenue growth to outpace its costs, which places the company in a good position to navigate through this inflationary period. The network continues to grow, with credentials and merchant locations up 7% and 17%, respectively. Cross-border travel-related spend also maintained its robust growth, increasing 26% year-on-year while Visa Direct reported 7.5 billion transactions, up 19% year-on-year, progressing on penetrating categories such as cross-border remittances. Altogether, we’re pleased with how the business is tracking and remain positive on Visa’s outlook.”

2. iShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSE:IAI)

5-Year Share Price Performance as of March 22: 93.50%

iShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSE:IAI) aims to replicate the performance of the Dow Jones U.S. Select Investment Services Index, comprising US equities within the investment services sector. This ETF provides exposure to American investment banks, discount brokerages, and stock exchanges. As of March 22, 2024, the fund owns net assets worth $472.5 million, featuring an expense ratio of 0.40% and a portfolio of 33 stocks. iShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSE:IAI) ranks 2nd on our list of the best financial ETFs. 

S&P Global Inc. (NYSE:SPGI) is the largest holding of the iShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSE:IAI). On February 20, S&P Global Inc. (NYSE:SPGI) announced that it is acquiring Visible Alpha, a provider of consensus data and analytics, to enhance its S&P Capital IQ platform. The Visible Alpha transaction is expected to finalize in 2024. 

According to Insider Monkey’s fourth quarter database, 82 hedge funds were bullish on S&P Global Inc. (NYSE:SPGI), up from 78 funds in the prior quarter. 

Baron FinTech Fund stated the following regarding S&P Global Inc. (NYSE:SPGI) in its fourth quarter 2023 investor letter:

“Shares of rating agency and data provider S&P Global Inc. (NYSE:SPGI) increased due to higher debt issuance amid more favorable market conditions. Billed issuance rose 47% in October and 26% in November against subdued levels last year, with issuance boosted by declining interest rates and tighter bond spreads. Positive equity market performance in the fourth quarter benefited asset-based fees. In addition, the company reported strong quarterly financial results with double-digit growth in revenue and earnings and raised full-year earnings guidance. We continue to own the stock due to the company’s long runway for growth and significant competitive advantages.”

1. SPDR S&P Capital Markets ETF (NYSE:KCE)

5-Year Share Price Performance as of March 22: 103.87%

Ranking 1st on our list of the best financial ETFs is SPDR S&P Capital Markets ETF (NYSE:KCE). The ETF aims to match the total return performance of the S&P Capital Markets Select Industry Index before fees and expenses. SPDR S&P Capital Markets ETF (NYSE:KCE) provides exposure to the capital markets segment of the S&P Total Market Index, including sub-industries such as Asset Management & Custody Banks, Diversified Capital Markets, Financial Exchanges & Data, and Investment Banking & Brokerage. As of March 22, 2024, the fund owns $319.91 million in assets under management, along with a gross expense ratio of 0.35%. Its portfolio consists of 63 stocks. 

Robinhood Markets, Inc. (NASDAQ:HOOD) is the largest holding of SPDR S&P Capital Markets ETF (NYSE:KCE). On March 14, Bernstein initiated coverage of Robinhood Markets, Inc. (NASDAQ:HOOD) with an Outperform rating. Bernstein anticipates significant gains in the company’s crypto-related revenues due to an expected “monster” crypto cycle over the next few years. Robinhood reported increased trading volumes across all asset classes in February, with crypto trading volume up 10% month-over-month to $6.5 billion. Bernstein forecasts the total crypto market value to reach $7.5 trillion by 2025, potentially increasing Robinhood’s crypto revenue ninefold.

According to Insider Monkey’s fourth quarter database, 21 hedge funds were long Robinhood Markets, Inc. (NASDAQ:HOOD), compared to 28 funds in the previous quarter. 

Here is what Claret Asset Management has to say about Robinhood Markets, Inc. (NASDAQ:HOOD) in its Q4 2021 investor letter:

“Robinhood went public at $38 a share at the end of July of this year. After a one day decline of 8%, it proceeded to rise to a peak of $85 in a matter of 4 days before settling down around $40 in September. Then, we found out that the company does not appear to understand the margin rules that apply to their client’s trades… and got fined by the Securities Exchange Commission. As of today, it is trading below $20, at 57 times earnings, approximately half of its IPO price. Caveat emptor… Buyer beware.”

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