Vanguard Financials ETF

Vanguard Financials ETF (VFH) is an index fund that tracks the MSCI US Investable Market Index (IMI)/Financials 25/50. As of August 31, 2026, it held 424 large, mid-size and small US banks, insurers, payment companies and asset managers. Its 0.09% expense ratio is well below the 0.28% average of similar funds, though XLF and FNCL charge slightly less. Because it holds only one sector, it rises and falls with the health of US finance.

• Over the year to Oct 30, 2026, VFH returned +10.0%, 3rd of 9 among similar funds.
• Its 5-year annualized return was +8.8%.
• Its worst full calendar year was 2022 (-12.3%); its best was 2021 (+35.2%).
• The deepest fall in its price history was 25.7% (Jan 12, 2022 to Sep 30, 2022), recovered by Feb 22, 2024.

As of Aug 31, 2026, the fund held 424 securities; the ten largest made up 45.67% of assets, and 2.91% sat in cash and money-market holdings.

By sector

• Over the three months to Aug 31, 2026, investors withdrew a net $191.3M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +4.60%, +5.81%, +1.21%.

Vanguard Financials ETF, a share class of Vanguard Financials Index Fund, follows an index, not a manager's picks. That index is the MSCI US Investable Market Index (IMI)/Financials 25/50, made up of large, mid-size and small US companies that the Global Industry Classification Standard (GICS), a common sector system, classifies as financials. These include banks, insurers, brokers, asset managers, consumer lenders, exchanges and data firms, and mortgage REITs (trusts that own mortgages rather than property).

Vanguard aims to copy the index, holding all or nearly all of its stocks in roughly the same proportions. At least 80% of net assets must normally be in index stocks. As of August 31, 2026, the fund had 424 holdings, but the 10 largest made up about 46% of assets. JPMorgan Chase led at 10.5%, then Berkshire Hathaway at 7.7%, Mastercard, Bank of America and Visa.

The fund is nondiversified under the Investment Company Act of 1940, so it can put more money into a few companies than a diversified fund. Turnover, the share of the portfolio replaced in a year, was a low 5%, per the December 19, 2025, prospectus. As of August 31, it also held 7 tiny derivative positions, mostly total return swaps that pass along a stock's gain or loss. It uses no leverage or options.

• VFH charges 0.09% a year, versus an average of 0.28% for the similar funds below (3rd of 9, cheapest first).
• Of that, 0.08% is the management fee; the rest covers other fund expenses.
• Using the prospectus's standard example, $10,000 invested would cost about $9 in the first year and $115 over 10 years (assuming a 5% annual return).

It is a low-cost but nondiversified single-sector fund, with 45.7% of assets in its top 10 stocks as of August 31, 2026, so it fits better as a smaller add-on than as a foundation.

VFH adds low-cost exposure to US banks, insurers and payment companies, but it is concentrated. The price history here starts June 2, 2020, so it cannot show how the fund did in the 2008 crisis. The prospectus shows its worst quarter was a 33.12% drop in the quarter ending March 31, 2020. In the 2022 bear market, it fell 25.7% between January 12 and September 30, 2022, and it did not regain its peak until February 22, 2024, about 17 months after the low. Its worst calendar year from 2018 to 2024 was 2018, at -13.46%. Selling shares to cover spending in a stretch like that would lock in losses. The yield was 1.7% as of October 29, 2026, paid quarterly. In the SEC's standard example, the costs on $10,000 come to about $115 over 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.