Should You Buy the Dip in This US Financials ETF?

The top United States indexes were trading in the red in mid-afternoon trading on September 22. Central banks in North America have committed to interest rates tightening to combat soaring inflation. This, in turn, has cast a shadow over the housing market and for top financials stocks. Today, I want to discuss whether it is worth buying the dip as a broad play in this sector.

Investors who are seeking exposure to financials may want to consider the iShares U.S. Financials ETF (NYSE:IYF). This exchange-traded fund (ETF) seeks the track the investment results of an index composed of U.S. equities in the financial sector. The ETF is perfect for investors who are hungry for exposure to U.S. banks, credit card companies, and insurers. Shares of this ETF have dropped 19% in 2022 at the time of this writing. That has pushed the fund into negative territory in the year-over-year period.

This ETF requires a middling MER of 0.39%, which should not dissuade prospective buyers. Some of the top holdings in this fund include Berkshire Hathaway, JPMorgan Chase, Bank of America, and Wells Fargo. Top U.S. banks like JPMorgan have seen their earnings wane in the first half of fiscal 2022. The hostile interest rate environment may push down earnings further in the second half of the year.

Shares of this ETF possess a Relative Strength Index (RSI) of 34. That puts this fund just outside of technically oversold territory.