Fidelity, State Street ETFs cost the same, but one pays you more

Article Summary

• FNCL offers broader diversification. Fidelity’s FNCL holds nearly 400 financial-sector stocks across large-, mid-, and small-cap companies, while XLF focuses on just 76 S&P 500 financial giants. This gives FNCL exposure to community banks, specialty insurers, and smaller financial firms that XLF excludes.
• FNCL has recently delivered higher income and returns. Over the past 12 months, FNCL generated a 1.7% yield versus 1.5% for XLF and produced a 7.4% total return compared to 6.7% for XLF.
• Both ETFs are low-cost, but XLF is more concentrated. Each fund charges a 0.08% expense ratio, but XLF allocates about 31% of assets to its top three holdings (Berkshire Hathaway, JPMorgan Chase, and Visa), making it more dependent on a handful of large companies. FNCL’s top three holdings represent roughly 25% of assets.
• The choice comes down to diversification vs. concentration. Investors seeking broader exposure across the U.S. financial sector may prefer FNCL, while those wanting a more concentrated bet on the largest financial companies in the S&P 500 may favor XLF.