IAT vs. IYF: Which iShares Financial ETF Is the Better Buy?
2026-07-14 10:24
•Andy Gould •The Motley Fool
•••• ••••••••••••••••••••••••••••• Axe Capital view
Picking Between IAT and IYF: What South African Investors Should Know
US financial ETFs differ in risk and diversity—what this means for SA investors.
US regional banks, represented by IAT, offer a juicy 2.6% dividend yield, but their rollercoaster ride isn’t for the faint-hearted. This fund can lose over half its value in downturns, which spikes risk, especially if your rand exposure already feels stretched. On the other hand, IYF’s diversified mix—including giant names like Berkshire Hathaway and JPMorgan—buffers volatility, with drawdowns closer to 25%. For someone watching rand-dollar swings and who prefers steadier income, IYF is a better fit. That said, if you’re chasing income and can stomach sharp swings, IAT might pay off in the long run. South African banks like Standard Bank or FirstRand react to global financial conditions, so a turbulent US financial sector can spill over, pushing rand volatility higher. But if US rates or regional credit conditions change dramatically, either fund’s performance could surprise. this is just my opinion and not financial advice
I’d favour IYF for a more stable, diversified financial exposure to hedge rand risks, while watching IAT cautiously for opportunistic income during dips.
- IAT
- IYF
- USD/ZAR
- Standard Bank
- US interest rate shifts impacting financials
- Rand volatility from global financial stress
6/10
The iShares U.S. Regional Banks ETF (IAT) offers higher dividend yield (2.6%) but greater volatility with a 55% maximum drawdown, while the iShares U.S. Financials ETF (IYF) provides broader diversification across banks, insurers, and asset managers with lower volatility (25% max drawdown). Both charge identical 0.38% expense ratios, making the choice dependent on investor risk tolerance and income preferences.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Andy Gould
Categories: Rates, Equities, Capital Returns, Financials
Tickers: IAT, IYF, AMJB, JPM, JPMPC, JPMPD, JPMPJ, JPMPK, JPMPL, JPMPM, VYLD, BAC, BACPB, BACPE, BACPK, BACPL, BACPM, BACPN, BACPO, BACPP, BACPQ, BACPS, BMLPG, BMLPH, BMLPJ, BMLPL, MERPK, BRK.A, BRK.B
Sentiment: Positive - Offers attractive 2.6% dividend yield and strong 1-year return (24.89%), but carries significantly higher volatility (beta 1.23) and maximum drawdown (55.53%), making it suitable only for risk-tolerant investors. Provides broader diversification across 142 holdings including mega-cap banks, insurers, and asset managers, resulting in lower volatility (beta 0.82), shallower drawdowns (25.05%), and more stable performance for conservative investors.
Keywords: ETF comparison, regional banks, financial sector, dividend yield, volatility, diversification, risk tolerance
Insights:
- IAT: Neutral: Offers attractive 2.6% dividend yield and strong 1-year return (24.89%), but carries significantly higher volatility (beta 1.23) and maximum drawdown (55.53%), making it suitable only for risk-tolerant investors.
- IYF: Positive: Provides broader diversification across 142 holdings including mega-cap banks, insurers, and asset managers, resulting in lower volatility (beta 0.82), shallower drawdowns (25.05%), and more stable performance for conservative investors.
- AMJB: Positive: Second-largest holding in IYF at 11.0%, a mega-cap bank with diversified operations that provides stability to the fund.