A Tale of Two Financial ETFs: How Vanguard Financials ETF (VFH) and First Trust Nasdaq Bank ETF (FTXO) Compare

Axe Cap view

Choosing Between VFH and FTXO: What SA Investors Should Know

Vanguard’s Financials ETF offers broad, cost-efficient exposure while First Trust’s Nasdaq Bank ETF appeals to income-focused, niche investors.

South African investors often look for ways to diversify financial sector exposure while managing costs and risks. Vanguard’s Financials ETF (VFH) stands out with its broad reach across 400-plus financial firms and a rock-bottom expense ratio of 0.09%. It delivered a healthy 52% total return over five years with less volatility. That’s a compelling package for those wanting steady growth without the hassle of picking individual names. By contrast, First Trust’s Nasdaq Bank ETF (FTXO) zooms in on US banks, offering a higher dividend yield and better short-term returns but at a much steeper cost (0.60%) and with higher price swings. For South Africans watching the rand (USD/ZAR), VFH’s wider spread means less shock to your investment if a single US bank stumbles. Watch out though, as a rapid US rate shift could narrow the yield gap and shake up both ETFs. Until then, VFH suits most local investors better. this is just our opinion and not financial advice