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Asset Class: Financials Sector
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Oldest ETF back tested: The Financial Select Sector SPDR® Fund (XLF)
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Correlation to U.S. Stock Market: 0.81
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Long-Term Performance: 5.39% CAGR
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S&P 500 Performance: 7.87% CAGR
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Back test timeframe: January 1999 – October 2021
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Number of ETFs available in this asset class: 30
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Number of ETFs in this asset class that are 10-years old or older: 22
XLF vs SPY: January 1999 – October 2021
XLF vs SPY: December 22, 1998 – October 29, 2021
The Deep Value ETF Accumulator rankings for the 22 oldest Financials sector ETFs:
The 4 top ranked Financials sector ETFs head-to-head comparisons:
KIE vs PFI vs IAI vs RYF: December 2006 – October 2021
KIE vs PFI vs IAI vs RYF: November 7, 2006 – October 29, 2021
Stated objectives of 4 top ranked Financials sector ETFs:
KIE – The SPDR® S&P® Insurance ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® Insurance Select Industry Index (the “Index”). Seeks to provide exposure the insurance segment of the S&P TMI, which comprises the following sub-industries: Insurance Brokers, Life & Health Insurance, Multi-Line Insurance, Property & Casualty Insurance, and Reinsurance. Seeks to track a modified equal weighted index which provides the potential for unconcentrated industry exposure across large, mid and small cap stocks. Allows investors to take strategic or tactical positions at a more targeted level than traditional sector based investing.
PFI – The Invesco DWA Financial Momentum ETF (Fund) is based on the Dorsey Wright® Financials Technical Leaders Index (Index). The Fund will normally invest at least 90% of its total assets in the securities that comprise the Index. The Index is designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 securities from the NASDAQ US Benchmark Index. Relative strength is the measurement of a security’s performance in a given universe over time as compared to the performance of all other securities in that universe. The Fund and the Index are rebalanced and reconstituted quarterly.
IAI – The iShares U.S. Broker-Dealers & Securities Exchanges ETF seeks to track the investment results of an index composed of U.S. equities in the investment services sector. Exposure to U.S. investment banks, discount brokerages, and stock exchanges. Targeted access to domestic investment services stocks. Use to express a sector view.
RYF – The Invesco S&P 500® Equal Weight Financials ETF (Fund) is based on the S&P 500® Equal Weight Financials Index (Index). The Fund will invest at least 90% of its total assets in common stocks that comprise the Index. The Index equally weights stocks in the financials sector of the S&P 500® Index. The Fund and the Index are rebalanced quarterly.
Why BRK.B?
If you looked closely at the rankings chart above you will note that I slipped Berkshire Hathaway Inc. (BRK.B) in as the #1 rank. And being astute investors you will also note that BRK.B is not an ETF but is a single company stock. The reason I did this is because I don’t particularly like the Financials sector and have refrained from investing directly into it in the past. But, I do want direct exposure to this sector, so I have come to the conclusion that BRK.B is actually an actively managed mutual fund or hedge fund that also happens to be an individual company stock. Below I will display a few charts to demonstrate why I consider BRK.B an actively managed Financials sector fund.
BRK.B Operating Subsidiaries as of August 3, 2019:
Source: https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway
BRK.B Stock Holdings as of June 30, 2021
Source: https://www.dataroma.com/m/holdings.php?m=BRK
Past performance of BRK.B:
BRK.B vs SPY: May 9, 1996 – October 29, 2021
BRK.B vs XLF vs SPY: December 22, 1998 – October 29, 2021
BRK.B vs XLF vs KIE vs PFI vs IAI vs RYF: November 7, 2006 – October 29, 2021
BRK.B company description: Berkshire Hathaway Inc., through its subsidiaries, engages in the insurance, freight rail transportation, and utility businesses worldwide. It provides property, casualty, life, accident, and health insurance and reinsurance; and operates railroad systems in North America. The company also generates, transmits, stores, and distributes electricity from natural gas, coal, wind, solar, hydro, nuclear, and geothermal sources; operates natural gas distribution and storage facilities, interstate pipelines, liquefied natural gas facilities, and compressor and meter stations; and holds interest in coal mining assets. In addition, the company manufactures boxed chocolates and other confectionery products; specialty chemicals, metal cutting tools, and components for aerospace and power generation applications; and flooring, insulation, roofing and engineered, building and engineered components, paints and coatings, and bricks and masonry products, as well as offers manufactured and site-built home construction, and related lending and financial services; and recreational vehicles, apparel products, jewelry, and custom picture framing products, and alkaline batteries. Further, it manufactures castings, forgings, fasteners/fastener systems, and aerostructures; and seamless pipes, fittings, downhole casing and tubing, and various mill forms. Additionally, the company distributes televisions and information; franchises and services quick service restaurants; distributes electronic components; and offers logistics services, grocery and foodservice distribution services, and professional aviation training and shared aircraft ownership programs. It also retails automobiles; furniture, bedding, and accessories; household appliances, electronics, and computers; jewelry, watches, crystal, china, stemware, flatware, gifts, and collectibles; kitchenware; and motorcycle apparel and equipment. The company was incorporated in 1998 and is headquartered in Omaha, Nebraska.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator article on Financials sector ETFs:
Best Long-Term Performance Financial Sector ETFs 1.1
Disclosure: We intend to start a new position in BRK.B within the next 72 hours. I am not a professional investment advisor. Please perform your own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.