Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
IShares US Financials IYF provides broad exposure to the U.S. financial-services sector. Unlike many other U.S. equity sectors, the financial-services sector has not returned to its precrisis highs. The reasons for this   Read more 

Bull Case

Despite net interest-margin pressure in the short term, over the longer term, higher interest rates should help U.S. banks.
Banks also are in general better-capitalized than in the past, and capital ratios have been improving.
The U.S. economy has been improving. Read more 

Bear Case

IYF is more expensive than its peers.
Morningstar's equity analysts hold the view that interest-spread revenue at banks won't grow until interest rates rise. Even then, when rates do rise, net interest margins are expected to rise more slowly than rates themselves, as higher-yielding assets will be added as lower-yielding ones fall off.
If interest rates rise, that could hamper underwriting activity at investment banks. Read more 

2 Low-Cost ETFs for Broad U.S. Stock Exposure 
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