Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Vanguard Financials ETF VFH is appropriate as a tactical satellite holding for broad exposure to the U.S. financial-services sector. Unlike many other U.S. equity sectors, the financial-services sector still has never come   Read more 

Bull Case

VFH offers comprehensive coverage of the U.S. financials sector, which mitigates company-specific risk.
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. Read more 

Bear Case

Rates haven't risen fast enough yet to give a boost to banks, and our analysts don’t believe that interest spread revenue at banks will grow anytime soon.
High unemployment could constrain consumers' willingness to borrow and their ability to repay their loans, potentially leading to large loan write-downs.
If interest rates rise, that could hamper underwriting activity at investment banks. Read more 

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