Should You Buy This US Financials ETF?



The top United States banks are gearing up to unveil their earnings in the days and weeks ahead. This should give experts and analysts some added information on the current state of the U.S. and global economy. Indeed, the top U.S. banks were expected to post a broad earnings decline compared to the previous year.

Top financial institutions have been faced with a difficult economic environment. The U.S. Federal Reserve has pursued the most aggressive rate tightening policy in over a decade. That has spooked investors and significantly limited credit growth. Should investors still seek exposure to the financials space in this climate?

The Vanguard Financials Index Fund (TSX:VFH) is an exchange-traded fund (ETF) that seeks to track the performance of a benchmark index that measures the investment return of stocks in the financial sector. Shares of this ETF have dropped 10% year-over-year as of close on January 13. The stock has shot up 5.6% in the opening weeks of 2023.

Some of the top holdings in this account include behemoths like Berkshire Hathaway, JPMorgan Chase, Bank of America, Wells Fargo, and Charles Schwab. Those five stocks made up nearly 30% of the fund as of its last fund facts release.

Investors may want to exercise caution as experts have continued to warn of a fragile domestic and global economy in 2023. Despite that, the U.S. economy still looks poised for a rebound by the second half of the year. I’m looking to snatch up this financial-focused ETF in the middle of January.