Best And Worst Q3 2021: Financials ETFs And Mutual Funds
Summary
- The Financials sector ranks ninth in Q3'21.
- Based on an aggregation of ratings of the 429 stocks in the Financials sector.
- KBE is our top-rated Financials sector ETF and DVFYX is our top-rated Financials sector mutual fund.
- Looking for a helping hand in the market? Members of Value Investing 2.0 get exclusive ideas and guidance to navigate any climate. Learn More »
(This article originally published on July 13, 2021.)
The Financials sector ranks ninth out of the 11 sectors as detailed in our Q3'21 Sector Ratings for ETFs and Mutual Funds report. Last quarter, the Financials sector ranked third. It gets our Unattractive rating, which is based on an aggregation of ratings of the 429 stocks in the Financials sector. See a recap of our Q2'21 Sector Ratings here.
Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the sector. Not all Financials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 24 to 408). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Financials sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.
Figure 1: ETFs with the Best & Worst Ratings
* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
KBWP is excluded from Figure 1 because its total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Best & Worst Ratings
* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
KBE is the top-rated Financials ETF and DVFYX is the top-rated Financials mutual fund. Both earn a Very Attractive rating.
PFI is the worst-rated Financials ETF and RYFNX is the worst-rated Financials mutual fund. PFI earns a Neutral rating and RYFNX earns a Very Unattractive rating.
429 stocks of the 2800+ we cover are classified as Financials stocks.
The Danger Within
Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund's performance is only as good as its holdings' performance.
Performance of Holdings = Performance of Fund
Analyzing each holding within funds is no small task. Our Robo-Analyst technology enables us to perform this diligence with scale. More of the biggest names in the financial industry (see At BlackRock, Machines Are Rising Over Managers to Pick Stocks) are now embracing technology to leverage machines in the investment research process. Cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors, and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.
Figures 3 and 4 show the rating landscape of all Financials ETFs and mutual funds.
Figure 3: Separating the Best ETFs From the Worst ETFs
Sources: New Constructs, LLC and company filings
Figure 4: Separating the Best Mutual Funds From the Worst Mutual Funds
Sources: New Constructs, LLC and company filings
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, or theme.
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