VFH vs XLF: fees, holdings and returns
XLF holds the financial companies in the S&P 500, about 75, such as big banks, insurers and payment firms. VFH holds about 420 US financial companies of every size, including many smaller banks. The largest names lead both. Over the same dates since January 2004, VFH returned about 6.7% a year and XLF returned about 5.9% a year.
Written by the Tactfolio research team. Fund facts checked October 17, 2026. Prices through October 20, 2026.
Key points
- XLF costs less: 0.08% a year against 0.09%.
- VFH started trading in January 2004. XLF started in December 1998.
- Worst drops since 2004: VFH −78.6%, XLF −82.7%.
- Daily correlation: 0.98 (1 means they always move together).
What is the difference between VFH and XLF?#
XLF draws only from the largest companies. VFH adds hundreds of mid-size and small banks, insurers and lenders. Smaller banks can fall harder in a banking scare, such as the regional bank failures of 2023. Their fees are close.
| Fact | VFH | XLF |
|---|---|---|
| Full name | Vanguard Financials ETF | State Street Financial Select Sector SPDR ETF |
| Issuer | Vanguard | SPDR (State Street) |
| Expense ratio | 0.09% a year | 0.08% a year |
| Started trading | January 26, 2004 | December 16, 1998 |
| Tracks | MSCI US Investable Market Index (IMI)/Financials 25/50 | Financial Select Sector Index |
| Holdings | 423 holdings as of September 30, 2026 | 76 holdings as of October 15, 2026 |
| Type | US stocks, ETF | US stocks, ETF |
Fund facts checked on the Vanguard VFH page and the SPDR (State Street) XLF page.
Is VFH or XLF cheaper?#
XLF costs less: 0.08% a year against 0.09%. On $10,000, that is about $9 a year for VFH and $8 for XLF. The fund takes its fee out of its own value a little each day, so you never get a bill.
VFH vs XLF performance over the same dates#
Both funds are measured from January 2004 to October 2026, the dates both traded. VFH returned about 6.7% a year and XLF returned about 5.9% a year. VFH came out ahead over this period, which does not mean it will again.
| Measure | VFH | XLF |
|---|---|---|
| $10,000 grew to | $43,836 | $37,182 |
| Total return | 338.4% | 271.8% |
| Return per year (CAGR) | 6.7% | 5.9% |
| Worst drop from a high | −78.6% | −82.7% |
| Volatility (how much it swings) | 26.4% | 28.3% |
| Last 12 months | 7.3% | 7.2% |
| Last 3 years, per year | 22.4% | 21.9% |
| Last 5 years, per year | 8.5% | 8.6% |
| Last 10 years, per year | 12.8% | 13.0% |
Prices through October 20, 2026. Figures use daily closing prices adjusted for splits, with dividends reinvested. They do not include taxes or the cost of buying and selling. Past results do not tell you what will happen next.
VFH and XLF returns by year#
| Year | VFH | XLF |
|---|---|---|
| 2026 (part of the year) | 2.7% | 3.0% |
| 2025 | 14.9% | 14.9% |
| 2024 | 30.4% | 30.6% |
| 2023 | 14.2% | 12.0% |
| 2022 | −12.3% | −10.6% |
| 2021 | 35.2% | 34.8% |
| 2020 | −2.0% | −1.7% |
| 2019 | 31.6% | 31.9% |
| 2018 | −13.5% | −13.1% |
| 2017 | 20.0% | 22.0% |
| 2016 | 24.9% | 22.4% |
| 2015 | −0.6% | −1.8% |
| 2014 | 14.1% | 15.0% |
| 2013 | 32.8% | 35.5% |
| 2012 | 26.2% | 28.4% |
| 2011 | −14.3% | −17.1% |
| 2010 | 14.8% | 11.9% |
| 2009 | 14.3% | 17.6% |
| 2008 | −48.9% | −54.9% |
| 2007 | −17.6% | −19.2% |
| 2006 | 19.4% | 18.9% |
| 2005 | 6.1% | 6.2% |
| 2004 (part of the year) | 10.2% | 7.3% |
Which fell further in bad times?#
A drawdown is how far a fund falls from its last high point. VFH’s worst fall was −78.6%, from June 4, 2007 to March 6, 2009. It got back to that high on November 11, 2016.
XLF’s worst fall was −82.7%, from June 1, 2007 to March 6, 2009. It got back to that high on July 5, 2017.
Their daily moves had a correlation of 0.98. A correlation of 1 means two funds always move up and down together. Near 0 means they move on their own. So holding both adds little variety.
Why people choose VFH or XLF#
VFH. People who want financial companies of every size, including regional banks, tend to pick VFH.
XLF. People who want the largest US financial companies, or trade often, tend to pick XLF.
Strategies that hold VFH or XLF#
These classic strategies hold one or both at least some of the time. Each is a set of written rules you can open, test and copy.
- Faber sector rotation (the three strongest US sectors), by Mebane Faber, 2010 (holds XLF)
Other funds like VFH and XLF#
Each fund has more funds that hold the same kind of investments, ranked by how closely they move with it: VFH alternatives and XLF alternatives.
Test a mix of VFH and XLF#
Open the builder, add VFH and XLF, and give each a weight, such as 50% and 50%. The backtest shows how the mix would have done, with its worst drop, on daily prices. You can also add a rule, for example to switch between them, and compare. Read the full pages for VFH and XLF, or see more ETF comparisons.
The details#
Both funds use Tactfolio’s stored daily prices, adjusted for splits, with dividends reinvested. They are compared only on days both traded, starting the later fund’s first day, so neither gets a head start. Correlation uses daily returns over the same days. Read what a backtest simulates for more on these measures.
Common questions#
Does XLF hold regional banks?#
Only the ones large enough to be in the S&P 500. VFH holds many more mid-size and small banks.
Do VFH and XLF hold the same top companies?#
Yes. Their largest holdings are the same big banks, insurers and payment companies.
Which is cheaper, VFH or XLF?#
XLF costs less: 0.08% a year against 0.09%. Fees come from each issuer and were checked on October 17, 2026.
Which did better, VFH or XLF?#
From January 2004 to October 2026, VFH returned about 6.7% a year and XLF returned about 5.9% a year, with dividends reinvested. Their worst drops were −78.6% and −82.7%. Past returns do not tell you what comes next.