XLF vs VFH vs IYF: Financial ETF Holdings and Basket Overlap

No. Commercial banks with deposit and lending exposures, insurers exposed to premiums, claims and reserves, capital-markets firms affected by underwriting and trading, asset managers, and payment networks can all sit within a broad financial sector while earning revenue through different channels. A sector index defines which of these companies it classifies as financial and which market universe it screens. The ETF then follows a particular version of that basket.

This article compares XLF’s Financial Select Sector Index, VFH’s MSCI US IMI Financials 25/50 Index, and IYF’s Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index. The first draws financial companies from the S&P 500. The other two use different approaches to a broader U.S. equity universe. A shared word in the benchmark names does not make their constituent lists or business classifications identical.

The dates below are the dates printed in the issuers’ holdings files. XLF and IYF are dated September 24, 2026. VFH and the comparison fund VOO are dated August 31, 2026. XLF and IYF therefore support a same-date comparison. VFH is an earlier, separate example about a month old. Figures from different dates should not be described as synchronized overlap.

XLF tracks the Financial Select Sector Index, which selects financial-sector companies from the S&P 500 using GICS. State Street describes its scope as financial services, insurance, banks, capital markets, mortgage REITs and consumer finance. That does not mean XLF holds every U.S. bank or every financial company. It means the fund holds companies classified in that sector within the large-cap S&P 500 universe. On September 24, the issuer reported 76 fund holdings and 76 index constituents. See State Street’s XLF profile and the S&P index overview.

Weights use float-adjusted market capitalization, subject to scheduled quarterly caps. If a company’s calculated weight exceeds 24%, it is capped at 23%. If companies above 4.8% together exceed 50% of the index, the method iteratively reduces the smallest company in that group to 4.5%; excess weight is redistributed among other constituents. The main rebalance uses the Wednesday before the second Friday of March, June, September and December as its reference date, with changes effective after the third Friday’s close. A separate month-end secondary rebalance can be triggered if the same 24% or 50% thresholds are breached on the second-to-last business day of a quarter-end month. These are scheduled index rules, unlike IYF’s daily trigger, and actual weights can drift between reviews. See the S&P U.S. Indices Methodology for Select Sector weighting.

VFH tracks the MSCI US IMI Financials 25/50 Index and reported 424 equities on August 31, 2026. It is designed to cover financial companies across a broader U.S. investable-market universe, which can include small- and mid-cap stocks as well as large caps. Under MSCI’s latest located 25/50 methodology, scheduled index weighting limits each company group to 25% and all groups above 5% in aggregate to 50%. The redistribution process uses lower buffers of 22.5% and 45%, respectively, and multiple share classes of one company can be grouped together. These are scheduled index-weight rules, not separate permanent daily caps on every ticker. MSCI describes four regular implementations a year. The ETF’s legal diversification classification cannot be inferred from “25/50” in the index name. See the MSCI 25/50 Indexes Methodology. It does not mean that every holding has an equal weight. See the MSCI index page and its August 2026 fact sheet, as well as Vanguard’s VFH profile and official 2026-08-31 holdings data. VFH gives larger companies greater weights while following the index’s diversification rules.

IYF’s August 31, 2026 prospectus identifies its benchmark as an index of financial companies from the Russell 1000. FTSE Russell’s Industry Classification Benchmark (ICB) determines the sector membership. Russell 1000 represents primarily large- and mid-cap U.S. companies; the financial subindex selects companies classified as financials from that parent universe. The current IYF benchmark has quarterly 40 Act 15/22.5 targets: one company may not exceed 15%, and companies individually above 4.5% may not collectively exceed 22.5%. Separately, a daily recalculation is triggered if companies individually above 4.8% collectively exceed 24%. These rules apply at different times and serve different purposes. They should not be collapsed into one permanent daily cap. See the IYF August 2026 prospectus and FTSE Russell’s September 2026 capping methodology.

IYF has also changed benchmarks. See the current IYF profile and 2026 prospectus. It switched to the current Russell index on September 20, 2021. Before that, it used Dow Jones U.S. Financials and capped financials benchmarks for different periods. A review of the fund’s history since its 2000 inception should not assume today’s index governed the entire record.

On September 24, 2026, XLF held 8.149448% in Visa (V) and 5.948586% in Mastercard (MA). Rounded to two decimal places, those figures are 8.15% and 5.95%. Summed at the source precision, they equal 14.098034%, or 14.10%. Neither ticker appears among the 142 equity lines in IYF’s file for that same date. That conclusion comes from checking the complete equity list, not just failing to spot them among the top ten. See the same-date issuer files for XLF and IYF.

The difference aligns with the funds’ classification systems. Under FTSE Russell’s 2026 ICB rules, Transaction Processing Services falls within Industrial Support Services in the Industrials sector. FTSE Russell’s May 2026 Russell 1000 Industrials factsheet explicitly places Visa and Mastercard Class A in that subsector. This provides a classification-based explanation for why the two firms are absent from the dated holdings of an IYF fund following an ICB Financials index, while they are present in XLF under its Financial Select Sector framework. See the ICB Ground Rules v5.1 and FTSE Russell’s May 2026 Industrials factsheet.

Visa and Mastercard are not banks. They operate payment networks that support authorization, processing and settlement of card transactions. See Visa’s 2025 annual report and Mastercard’s 2025 Form 10-K. Banks and other financial institutions generally issue cards and extend credit to cardholders. Their presence in XLF therefore does not mean that their weights are bank-loan exposure. Conversely, their absence in IYF’s file does not mean every payment-services company is excluded from every financial fund. It describes the benchmark classification and actual fund holdings on this date.

Berkshire Hathaway is another useful classification example. Class B shares rank among the top holdings of XLF, VFH and IYF, but these ETFs own Berkshire shares; they do not directly hold a look-through copy of Berkshire’s listed stock portfolio. Berkshire is a holding company with insurance operations as well as railroad, energy and utility, manufacturing, service and retail businesses, as described in Berkshire Hathaway’s 2025 annual report. XLF’s 12.23% Berkshire position should not be read as 12.23% pure insurance or banking exposure. Adding Berkshire’s underlying investments to an ETF’s holdings would double-count indirect positions unless a separate look-through method were explicitly used.

State Street separately reported XLF’s fund industry allocation on September 24, 2026: Financial Services 29.51%, Banks 27.99%, Capital Markets 25.72%, Insurance 12.81%, and Consumer Finance 3.97%. These displayed categories add to 100% after rounding and show that XLF has material allocations outside banks. The dated rows are available in the issuer’s product profile.

Do not assume this allocation table uses the same presentation as the top-holdings file. The sector field in the XLF holdings workbook is a dash, so that file does not let us assign Berkshire, Visa or JPMorgan directly to the profile’s industry totals. The profile’s industry allocation is an issuer-reported grouping; the holdings calculations below are company-level fund weights. We do not combine the two to estimate a company’s share of a sector category.

The table lists stock weights as reported by each issuer. XLF is dated September 24, IYF September 24, and VFH August 31. Percentages are issuer-reported shares of net assets; they have not been rescaled to 100%. For XLF, the raw six-decimal weights for the top ten sum to 57.505780%, which rounds to 57.51%. Adding each individually displayed two-decimal weight yields 57.52%. The table totals use the raw precision. These are the issuers’ dated source files for XLF, VFH and IYF.

This is not a synchronized ranking of all three products because the VFH date is earlier. Price moves and index changes since then are not reflected. A top-ten weight is also a limited concentration measure. It does not calculate volatility, losses, correlation or which fund is “safer.”

XLF’s September 24 file contains 76 equities plus separate currency, money-market and futures lines. IYF’s file reports 142 equities as well as a money-market position, cash, collateral and two futures. The FAZ6 and IXAZ6 futures each display a rounded weight of 0.00%, yet report notionals of $732,940 and $9,488,500, respectively. Weight and notional are separate fields, so 0.00% does not mean that the contracts or derivative exposure are absent. “Number of equity holdings,” “number of rows in a downloaded file” and “number of index constituents” are related but different counts.

In VFH’s August 31 source data, summing percentOfFunds once for each reported category gives 94.21342% for 424 direct equities, 2.84442% across three reserve rows and 2.94227% across seven derivatives. The displayed total is 100.00011%, a rounding difference. The 434 money-market reserve detail rows are not additional equity holdings, and the repeated allocationToUnderlyingFunds field is not added again. The seven TRS rows have no ticker and leave notionalValue blank. VFH reports direct Visa stock at 4.22201% and a separate Visa TRS line at 2.51985%. Those figures do not prove that Visa’s total economic exposure is exactly 6.74186%. The source does not establish that the displayed swap market-value weight is interchangeable with the market value of a share holding or with the contract’s notional exposure. The supported statement is that the fund reports these as separate line items.

The overlap calculations below compare direct equity tickers or identifiers. They do not add derivative counterparties, reference assets, swap notionals or delta-adjusted exposure. This is not a complete measure of economic sensitivity, return correlation or tracking error between the two funds.

Using the same-date September 24, 2026 equity files, XLF and IYF share 63 issuer tickers. Those 63 names add up to 79.313661% of XLF. In IYF they account for 88.36%, based on the two-decimal precision the issuer publishes. A symmetric helper metric that takes the lower of the two fund weights for each shared ticker sums to 77.895595%, or 77.90%.

The three figures answer different questions. The 79.31% is the share of XLF allocated to tickers also in IYF. The 88.36% is the corresponding IYF figure. The 77.90% adds the smaller fund weight for every common name as a symmetric summary. It does not mean that 77.90% of the fund assets are identical or that the returns have a 77.90% correlation. JPM is about 11.70% in XLF and 11.29% in IYF, for example. Berkshire is 12.23% versus 11.73%, while Visa and Mastercard are not part of IYF’s common set.

Berkshire’s symbol is BRK.B in the XLF file and BRK B in the IYF CSV. We matched only this alias because both files explicitly identify Berkshire Hathaway Class B; the IYF file does not provide a CUSIP field to confirm the match. Other symbols were matched as reported rather than by stripping punctuation from every ticker. This avoids accidentally merging different share classes or unrelated securities.

The official full XLF file available for this comparison is dated September 24. Its issuer profile links to the current daily file. We did not locate a complete August 31 XLF file from the issuer. Requests for a past IYF date were ignored or returned a webpage instead of a holdings file, so those responses were not treated as historical holdings. For that reason, we did not calculate same-date full-basket overlap for XLF versus VFH or XLF versus VOO.

A separate direct-equity comparison is possible for VFH and Vanguard S&P 500 ETF (VOO), both dated August 31, 2026. The VFH and VOO issuer holdings were compared. By CUSIP, the funds shared 76 directly held equity securities. Those positions total 81.10342% of VFH and 12.22192% of VOO. The difference is expected: VFH tracks a financial-sector index, while VOO holds companies across the S&P 500, so financial firms make up only part of VOO.

Taking the smaller of each common stock weight gives a symmetric total of 12.22192%. In this pair all 76 matched securities’ VOO weights were no greater than their VFH weights, so the metric equals VOO’s common-stock sum. Other fund pairs need not produce this result. The calculation is a date-matched comparison of direct equity identifiers, not a measure of total financial exposure, company look-through, derivative exposure or return co-movement.

Consider a static example with 80% in VOO and 20% in VFH. On August 31, 2026, JPM weighed 1.44070% in VOO and 10.13339% in VFH. If the reported fund weights and mix remained unchanged, JPM’s arithmetic portfolio weight would be 0.80 × 1.44070% + 0.20 × 10.13339% = 3.179238%, or about 3.18%. The account weight assigned to the stocks common to both funds is 0.80 × 12.22192% + 0.20 × 81.10342% = 25.99822%, about 26.00%. This is the combined portfolio allocation to common direct-stock holdings, not a symmetric overlap metric.

This is not a return simulation or an allocation recommendation. It is a static weighted average of published direct stock weights; it excludes derivatives from both VFH and VOO. Market moves change the stock weights. Maintaining the stated mix would require trading and rebalancing. The example does not account for rebalance timing, taxes, fees or execution prices. In particular, combining XLF’s September 24 and VFH’s August 31 snapshots as if they were holdings on one shared date would not describe the portfolio’s actual exposure at that time.

A 50/50 XLF and IYF example can isolate the Visa and Mastercard difference. In the September 24 files, IYF has neither ticker while XLF has 8.149448% Visa and 5.948586% Mastercard. Holding each fund at half weight would therefore create arithmetic direct-stock weights of 4.074724% Visa and 2.974293% Mastercard, assuming no other changes. This sums the two dated fund weights mechanically; it does not show that the combination is appropriate. Market prices and index membership can change those percentages.

It is misleading to treat financial stocks as a single-direction interest-rate bet. Banks are affected by loan yields relative to deposit and wholesale funding costs, credit provisions, loan demand and fee or trading activity. A rise in rates can allow some assets to reprice, but deposit costs can rise too, while demand and credit quality can deteriorate. Large banks also have cards, trading and wealth businesses, so even one bank cannot be reduced to a deposit-and-loan model. JPMorgan Chase’s 2025 annual report reports these revenue streams separately.

Insurers combine premiums and claims with reserves, underwriting and returns on their investment portfolios. Rates can influence the yield on new investments, but also the value of existing assets, product guarantees, renewals and claims inflation. An ETF that includes insurers does not isolate any one of these forces.

Payment networks can be affected by transaction volume, cross-border payments, network fees and related services. They also face slower consumer spending, travel demand, relationships with merchants and banks, regulation and technology competition. A different revenue model from a bank does not remove market or economic risk. Asset managers, exchanges, credit-data firms and brokerages likewise have their own sensitivity to asset prices, trading volumes, fund flows and capital-markets activity.

It does not follow that “financial ETFs rise when rates rise” or that a lower bank weight makes an ETF defensive. The dated holdings file can tell us which stocks and industries were present and at what reported weights. It cannot predict how prices will respond as earnings, valuation, economic conditions, flows and expectations change. No sensitivity regression or forecast is calculated here.

The issuers’ current product documents report gross annual expense ratios of 0.08% for XLF, 0.09% for VFH and 0.37% for IYF. See the current XLF, VFH and IYF profiles. A simple static illustration on an unchanged $10,000 for one year gives $8, $9 and $37, respectively. Actual fund expenses are reflected over time in net assets as balances and returns change, so this multiplication is an approximation. It excludes trading commissions, bid-ask spreads, taxes, tracking differences and account charges.

A lower fee does not resolve a difference in holdings. XLF concentrates on the financial slice of the S&P 500 and has sizable Berkshire, Visa and Mastercard positions. VFH follows a broader MSCI GICS financials universe with more smaller companies and payment networks. IYF uses the Russell 1000 and ICB framework and has neither V nor MA in this dated file. The cheapest expense ratio does not automatically offset a classification or company exposure a holder does not want.

ETF shares trade on an exchange, but the market price is not guaranteed to equal net asset value. Spreads can widen and premiums or discounts can appear during volatile markets. A fund may also sample an index instead of holding every constituent in identical proportions, or use futures or swaps. This helps explain why an issuer’s daily equity file, the index’s stated constituents and the broader concept of economic exposure are not always the same list.

Start with the question you are trying to answer. If you want to examine large U.S. financial companies classified under an S&P sector framework, review XLF’s index scope and top holdings, including Visa and Mastercard. If you want a broader universe of financial companies, review the constituents and 25/50 rules of the MSCI index underlying VFH. If you want Russell 1000 financial companies classified under ICB, review IYF’s benchmark and its separate quarterly and daily capping rules. These are starting points for comparison, not fund recommendations.

Then download full holdings files with matching dates. Separate equities from cash, collateral, futures and swaps. Use a security identifier such as CUSIP together with the share-class name to verify a genuine symbol alias, but do not combine different share classes automatically. Preserve issuer weights as published unless there is a stated reason to normalize them. Record rounding differences. Finally compare business classification, company-level concentration, derivative rows, expense ratios and trading costs along with the number of holdings.

Diversification is not determined by security count alone. A fund with 142 stocks can still put roughly 23% in its top two names. Another fund with 76 can hold material weights in Berkshire, JPMorgan, Visa and Mastercard. Owning several financial ETFs may repeat Berkshire or JPMorgan, or add payment-network, capital-markets or insurance exposure you did not intend. Ticker overlap makes repeated positions visible, but it does not measure a company’s internal revenue sources or a fund’s full derivative exposure.

This comparison describes three U.S.-listed funds and dated U.S. index materials. It does not cover availability to investors outside the United States, local taxes, foreign-exchange effects, foreign-fund rules or account protections. Check the rules that apply to your own market and account.