iShares U.S. Financials ETF vs State Street SPDR Bank ETF: Which Is the Better Buy?
2026-10-07 12:30
•John Ballard •The Motley Fool
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Broad U.S. Financials ETF Edges Out Bank-Focused Rival
iShares U.S. Financials ETF (IYF) beats the banking-centric SPDR Bank ETF (KBE) for long-term growth and resilience.
Looking at the two U.S. financial ETFs, IYF offers a more diversified approach across the financial sector, not just banks. Over the last five years, a $1,000 investment in IYF would have grown to about $1,626 versus $1,347 for KBE. The difference isn’t just returns; IYF weathers downturns better, with smaller drawdowns during market stress. This matters for any investor, including those watching from South Africa, because it suggests safer exposure if the rand weakens or global rates become volatile. KBE’s higher dividend yield appeals to income seekers, but its concentrated banking exposure means bigger ups and downs, which our local banks like Standard Bank or FirstRand would reflect if global financials take a hit. If the U.S. financial sector slows unexpectedly or regulatory pressures intensify, IYF’s broader spread might not shield investors as well as hoped. this is just our opinion and not financial advice
Buy IYF for a smooth ride with decent growth and resilience; trim or avoid KBE unless you need income and can handle higher risk.
- IYF
- KBE
- USD/ZAR
- U.S. regulatory changes increasing costs for banks
- Potential rand volatility impacting offshore returns
6/10
The article compares two financial sector ETFs: iShares U.S. Financials ETF (IYF) and State Street SPDR Bank ETF (KBE). IYF offers broader financial services exposure with 143 holdings and has delivered superior five-year returns ($1,626 vs $1,347 on $1,000 invested), proving more resilient during market downturns. KBE focuses narrowly on banking with 107 holdings, offers a higher dividend yield (2.30% vs 1.53%), and has a slightly lower expense ratio, but experienced deeper drawdowns. The article recommends IYF for long-term growth investors seeking quality large-cap financials, while KBE may suit income-focused investors prioritizing yield.
Our take is based on reporting first published by The Motley Fool.