The Financials sector, and this ETF, is dominated by the big banks, which make up ~80% of its holdings, followed by the insurance stocks, at around 10%, which MM is currently particularly keen on. This ETF is sitting ~10% below its 2025 high, having traded basically sideways for the last 12 months. While this ETF is looking more appealing now than in January, ultimately, we prefer to pick our way through the individual stocks in the space with so much fundamental news likely to impact performance on the individual stock level, but we know some subscribers now prefer the relative ease of ETFs.
The broad financials sector has enjoyed a strong advance since COVID, but with limited loan growth likely in the banks over the next year or so, it remains hard to get overly excited about the QFN ETF. However, after being neutral towards this ETF at the start of 2026, we’re now happy to adopt a slightly more bullish outlook towards it since the banks have retraced sharply in the last month, with sentiment towards them plummeting after increased bad debt provisions and a negative read from the budget on future volume on loans for investment property.
NB: At MM, we remain underweight the “Big Four banks”, with the stance likely to be maintained through 2026.
- We can see the QFN ETF testing the $19 area in the second half of 2026, but it’s likely to be a grind as opposed to an impulsive move.
