Bank ETF FTXO Delivered a 20% Return Over the Last Year. Here's Why I'd Choose IYF Instead.

The First Trust Nasdaq Bank ETF (FTXO) delivered a 20% return over the past year, while the iShares U.S. Financials ETF (IYF) offers a more diversified play on the entire financials sector at a lower cost. Both funds target American financial institutions, but they differ in concentration levels, fee structures, and market volatility handling.

FTXO has a higher dividend yield (1.7%) than IYF (1.4%), but IYF has a lower expense ratio (0.37% vs. 0.6%). IYF holds 141 positions, with Berkshire Hathaway, JPMorgan Chase & Co., and Bank of America as its largest holdings. FTXO, being more concentrated in banking, holds Citigroup, Bank of America, and JPMorgan Chase as its largest positions.

Financial institutions provide stability, consistent income, and potential inflation hedging. FTXO's focus on banks allows it to pay more in dividends, but IYF is considered a more stable, less risky option for investors seeking upside potential in the financial sector.