A sound investment process and strong management team underpin iShares US Financials ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in quality exposure and an underweight in volatility exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. The equity team managing the passive product drives the strategy's Above Average People Pillar rating. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had overall reasonable fees and a favorable lineup success ratio.

Analyst Rating

Berkshire Hathaway Inc. - Ordinary Shares - Class B

JPMorgan Chase & Co

Bank of America

Wells Fargo

S&P Global

Goldman Sachs

Morgan Stanley

BlackRock

Marsh & McLennan

Chubb

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. iShares US Financials ETF earns a High Process Pillar rating. The predominant contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Impressive risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The parent firm's five-year risk-adjusted success ratio of 60% contributes to the process. The measure indicates the percentage of a firm's funds that survived and surpassed their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index composed of U.S. equities in the financial sector.  The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The underlying index measures the performance of the financials sector of the U.S. equity market. 

 The portfolio is overweight in financial services by 15.8 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are technology and industrials, with technology underweighting the average portfolio by 5.2 percentage points of assets and industrials similar to the average. The portfolio is positioned across 142 holdings and is less top-heavy than peers. Specifically, 46.7% of the fund’s assets are concentrated within the top 10 fund holdings, compared to the typical peer's 49.0%. And finally, in terms of portfolio turnover, this fund trades less regularly than the typical peer in its category, which may result in a lower cost to investors.

High

Process

iShares US Financials ETF benefits considerably from its equity team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. The team is well equipped, with an average of 17 years of portfolio management experience. Together, they manage a total of 258 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate. The team has undergone a bout of turnover recently, with Amy Whitelaw leaving within the last five months. Even though it is a passive fund, high turnover can still hinder the effectiveness of the investment process. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares U.S. Financials ETF

IYF tracks a market-cap-weighted index of US financial companies, while utilizing a capping methodology to ensure diversification among its index constituents.

Launched on 05/22/2000, the iShares U.S. Financials ETF (IYF) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Broad segment of the equity market.

Should You Invest in the iShares U.S. Financials ETF (IYF)?

If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the iShares U.S. Financials ETF (IYF), a passively managed exchange traded fund launched on 05/22/2000.

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News for iShares U.S. Financials ETF ETF (IYF)