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The Best Financial Funds for Long-Term Investors

edited April 15 in The Bullpen
The Best Financial Funds for Long-Term Investors

When Warren Buffett turns bullish on a stock sector, the market takes notice. In the last quarter of 2018, Buffett’s focus shifted to financials, as he increased Berkshire Hathaway (ticker: BRK.A, BRK.B) stock holdings in some of the nation’s largest banks.

While banks lost some year-to-date gains in late March, financials finished the first quarter on a strong note. “The valuations of many financial stocks and banks in particular are extremely attractive,” says Robert Johnson, a professor of finance at Creighton University. “From a value investing standpoint, banks have a much larger margin of safety than the average stock.”

Investors seeking to follow Warren Buffett's lead should consider these seven banking funds to buy and hold.

1. Fidelity Select Banking Portfolio (FSRBX). Wells Fargo & Co (WFC), Bank of America Corp. (BAC) and SunTrust Banks (STI) are among FSRBX's top holdings. Nearly 64% of the fund’s weighted toward regional banks, with 22.61% allocated to diversified banks. FSRBX is classified as a mid-cap value fund and is subject to the same economic risk factors as other financial funds.

2. Vanguard Financials ETF (VFH). VFH offers exposure to the financial sector as a whole, with the largest allocations focused on diversified banks and regional banks. Altogether, the fund holds 411 individual stocks, with JPMorgan Chase & Co. (JPM), Bank of America and Berkshire Hathaway topping the list of largest holdings. Similar to other Vanguard ETFs it boasts a low expense ratio, allowing buy-and-hold investors to maintain a larger share of fund earnings over time. – Rebecca Lake
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