XLF vs EUFN: Is a U.S. Financials ETF Superior to a Europe-Focused Fund?
Key Points
State Street Financial Select Sector SPDR ETF carries a significantly lower expense ratio of 0.08% compared to 0.49% for iShares MSCI Europe Financials ETF.
iShares MSCI Europe Financials ETF offers a higher dividend yield of 3.9% and has delivered a stronger 1-year total return of 29.4%.
State Street Financial Select Sector SPDR ETF concentrates on U.S. giants like JPMorgan Chase, while iShares MSCI Europe Financials ETF focuses on European leaders like HSBC Holdings.
The State Street Financial Select Sector SPDR ETF (NYSEMKT:XLF) provides low-cost exposure to the U.S. financial giants, while the iShares MSCI Europe Financials ETF (NASDAQ:EUFN) targets the banking and insurance leaders across developed European markets.
Investors choosing between these two funds are essentially weighing geographic risk and cost. One captures the heavyweights of Wall Street, while the other looks across the Atlantic to European financial giants. This comparison examines how their different cost structures and regional focuses impact potential returns and income for a portfolio.
Snapshot (cost & size)
| Metric | EUFN | XLF |
|---|---|---|
| Issuer | iShares | SPDR |
| Share price | $42.39 (as of 2026-08-13) | $58.26 (as of 2026-08-13) |
| Expense ratio | 0.49% | 0.08% |
| 1-yr return (as of 2026-08-13) | 29.4% | 12.1% |
| Dividend yield | 3.9% | 1.4% |
| Beta | 0.77 | 0.85 |
| AUM | $4.3B | $58.5B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the close of trading on Aug. 13, 2026.
The State Street Financial Select Sector SPDR ETF is significantly more affordable for long-term holders, featuring a slim 0.08% expense ratio. The iShares MSCI Europe Financials ETF is more expensive to own, but it offers a significantly higher payout for income-seeking investors.
Performance & risk comparison
| Metric | EUFN | XLF |
|---|---|---|
| Max drawdown (5 yr) | (35.2%) | (25.8%) |
| Growth of $1,000 over 5 years (total return) | $2,612 | $1,647 |
What's inside
The State Street Financial Select Sector SPDR ETF aims to mirror the Financial Select Sector Index, providing targeted exposure to 76 holdings within the U.S. financial landscape. Its portfolio is heavily concentrated in financial services at 98%, with a minor 2% allocation to technology companies. Its largest positions include JPMorgan Chase (NYSE:JPM) at 12%, Berkshire Hathaway Class B shares (NYSE:BRKB) at 11.7%, and Visa Inc Class A shares (NYSE:V) at 7.7%. This fund, which was launched in 1998, enables investors to access diversified sub-sectors including banking, insurance, and mortgage real estate investment trusts. State Street Financial Select Sector SPDR ETF has paid $0.81 per share over the trailing 12 months, which on its recent ~$58.3 share price works out to a 1.4% yield.
The iShares MSCI Europe Financials ETF provides exposure to 83 holdings within developed European markets, tracking an index of banking, insurance, and financial services firms. Its sector makeup is 98% financial services, with 1% each in technology and industrials. Its largest positions include HSBC Holdings (LSE:HSBA) at 9.9%, Banco Santander at 5.5%, and Allianz at 5.2%. Launched in 2010, the fund offers a concentrated way to play European financial leaders across multiple countries. iShares MSCI Europe Financials ETF has paid $1.65 per share over the trailing 12 months, which on its recent ~$42.4 share price works out to a 3.9% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy?
These are both financials ETFs, but their differing geographic focus makes them different funds in a number of ways.
The European banking system has fewer small-scale banks than the U.S., meaning EUFN is more concentrated in large-cap stocks, at 93% of its holdings, with 7% classified as mid-caps.
XLF, however, is 75% large caps, 20% mid caps, and 1% small caps, reflecting the more regional bank network present in the country.
Both funds are highly focused on their top 10 holdings. XLF holds about 56% of assets in its top 10, while EUFN has 45% in its top 10, meaning with either fund you are buying large exposure to the most important, and presumably most profitable, banks in each region.
While the U.S. financial system is robust, you would be mistaken if you think XLF is the better performer. In fact, over every typical time frame, EUFN bests its American stock counterpart.
Over 2026 to date, EUFN has returned 15.7%. Over the past three, five, and ten years, the fund has delivered annualized returns to investors of 33.4%, 22%, and 14.5%, respectively
Meanwhile, XLF is up 4.9% year-to-date. It has also lagged EUFN in the 3-, 5-, and 10-year time frames with returns of 19.1%, 11.2%, and 13.6%. It certainly isn't a bad performer, but if you're looking for a financials ETF to invest in, it's wise to go with the fund that has been a consistent outperformer. That fund is the iShares MSCI Europe Financials ETF, EUFN
HSBC Holdings is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Visa. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.