Key Points
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Vanguard Financials ETF provides a significantly lower expense ratio than iShares U.S. Regional Banks ETF
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iShares U.S. Regional Banks ETF offers higher yield but carries much higher five-year price volatility and deeper maximum drawdowns
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Vanguard Financials ETF holds over 400 stocks for broad sector exposure whereas the iShares fund concentrates entirely on 31 regional banks
- 10 stocks we like better than Vanguard World Fund – Vanguard Financials ETF ›
The choice between Vanguard Financials ETF (NYSEMKT:VFH) and iShares U.S. Regional Banks ETF (NYSEMKT:IAT) centers on narrow industry concentration versus broad-sector diversification, with VFH offering lower costs and wider reach.
Investors seeking financial sector exposure may weigh the merits of broad industry tracking against a targeted play on regional banks. While VFH captures the entire financial landscape, IAT focuses exclusively on the regional banking subsector, introducing specific risks and potential rewards associated with local lending institutions.
Snapshot (cost & size)
MetricIATVFHIssueriSharesVanguardShare price$63.31 (as of 2026-07-10)$136.45 (as of 2026-07-10)Expense ratio0.38%0.09%1-yr return (as of July 10, 2026)23.70%7.90%Dividend yield2.60%1.70%Beta0.880.90AUM$676.7 million$13.5 billion
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield based on the closing Ju;y 10 price.
Vanguard Financials ETF is notably more affordable with its 0.09% expense ratio. While iShares U.S. Regional Banks ETF carries a higher 0.38% fee, it offers a higher payout with a yield gap of -0.87 ppt compared to its peer.
Performance & risk comparison
MetricIATVFHMax drawdown (five years)(55.50%)(25.70%)Growth of $1,000 over five years (total return)$1,289$1,673
What’s inside
Vanguard Financials ETF tracks 415 holdings, offering broad exposure across financial services (97%), technology (2%), and real estate (1%). Its largest positions include JPMorgan Chase (NYSE:JPM) at 8.8%, Berkshire Hathaway (NYSE:BRKB) at 7.8%, and Mastercard (NYSE:MA) at 4.8%. The fund was launched in 2004. It has paid $2.33 per share over the trailing 12 months, which, on its recent ~$136.45 share price, works out to a 1.70% yield.
iShares U.S. Regional Banks ETF is significantly more concentrated, holding 31 stocks purely within the financial services sector. Its largest positions include PNC Financial Services Group (NYSE:PNC) at 15%, U.S. Bancorp (NYSE:USB) at 14.2%, and Truist Financial (NYSE:TFC) at 9.2%. The fund was launched in 2006. It has paid $1.62 per share over the trailing 12 months, which, on its recent ~$63.31 share price, works out to a 2.60% yield.
Which fund is the better buy?
Both funds are nearly exclusively carrying U.S. financial services stocks in their portfolio. But they have notable differences, too.
IAT, the iShares regional bank ETF, differs from its Vanguard rival in that it focuses much more on small-cap stocks. About 23% of IAT is held in small caps compared to 13% for the Vanguard fund, VFH. That concentration explains the great performance of IAT in the past year. Small-cap stocks are having their best year since 1991, meaning IAT has captured a lot of that wave. In addition to its 10-year return of 23.7%, nearly 16 percentage points higher than VFH’s, IAT has returned 26.7% over the past three years, compared to VFH’s 19.7%.
VFH is more heavily skewed toward large-cap stocks, with 61% of holdings compared to 31%, meaning it hasn’t benefited as much from small-cap stocks’ rally. VFH has better, longer-term performance, including a 10-year annualized return of 13.1% compared to 9.7% for IAT.
IAT’s strong near-term performance is compelling, despite VFH’s good long-term showing. IAT’s superior dividend yield is a plus, too. For 2026, the best way to play banking stocks is the iShares Regional Banks ETF, IAT.
For more guidance on ETF investing, check out the full guide at this link.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, Mastercard, Truist Financial, and U.S. Bancorp. The Motley Fool has a disclosure policy.
