FNCL vs IAI: Which ETF Is Better in 2026?
A metric-by-metric comparison of Fidelity MSCI Financials Index ETF (FNCL) and iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) — both Financial funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
FNCL and IAI compete directly — both are Financial funds chasing the same job in a portfolio. That makes this a genuine either/or: the index each tracks, what it costs, and how it has handled drawdowns are what separate them, not the broad exposure they give you.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — FNCL scores higher: 58.7 (Grade C) versus 51.2 for IAI. That doesn't make IAI a bad fund; it means FNCL currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| FNCL | IAI | |
|---|---|---|
| Category | Financial | Financial |
| Expense ratio | 0.08% | 0.38% |
| Fund size (AUM) | $2.2B | $1.3B |
| Dividend yield | 1.65% | 1.17% |
| 1-year return | +8.14% | +9.23% |
| 3-year return | +69.30% | +98.79% |
| Volatility | 14.88% | 20.12% |
| Max drawdown | -17.29% | -23.14% |
| Sharpe ratio | 0.21 | 0.21 |
| ETFValuer score | 58.7 | 51.2 |
| Grade | C | C |
| Overall rank | #269 | #373 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
FNCL is the cheaper fund, charging 0.08% a year versus 0.38% for IAI — a gap of 0.30 percentage points (about $29.60/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What IAI's Fees Cost You
IAI charges an expense ratio of 0.38% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, IAI returned +98.79% versus +69.30% for FNCL — a gap of about 29.5 percentage points. On risk, FNCL has held up better historically, with a shallower max drawdown (-17.29% vs. -23.14%). IAI currently has the better risk-adjusted return (Sharpe ratio of 0.21 vs. 0.21), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), FNCL and IAI show a strong correlation of 0.882 — clearly related, with room to diverge. There is some genuine differentiation here, but not enough to call these complementary holdings. Pairing them mostly concentrates risk rather than spreading it.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.882 | Strong — clearly related, with room to diverge |
| R-squared | 77.9% | 77.9% of FNCL's daily moves are explained by IAI's |
| Tracking error (annualised) | 9.64% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | FNCL +19.39% · IAI +25.47% | IAI ahead by 6.09 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, FNCL finished as much as +0.2 points ahead of IAI at the best extreme and -22.9 points at the worst — a 23.2-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
FNCL and IAI hold 2 of the same companies among their top 10 positions. Those shared names make up 6.0% of FNCL and 32.6% of IAI. That's modest duplication — the funds are mostly distinct at the top, so holding both can still add diversification.
| Shared Holding | FNCL Weight | IAI Weight |
|---|---|---|
| Goldman Sachs Group Inc/The | 3.28% | 18.31% |
| Morgan Stanley | 2.68% | 14.29% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean FNCL if…
- You want the lower running cost — 0.08% vs 0.38%, about $30 a year less on a $10,000 position
- Current income matters to you — it yields 1.65% against 1.17%
- It has been the calmer ride (14.9% volatility vs 20.1%) with a shallower worst-case fall (-17.3% vs -23.1%)
Lean IAI if…
- You weight recent results heavily — it returned 98.8% over 3 years against 69.3%
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is FNCL or IAI better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — FNCL scores higher: 58.7 (Grade C) versus 51.2 for IAI. That doesn't make IAI a bad fund; it means FNCL currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, FNCL or IAI?
FNCL currently has the lower expense ratio (0.08% vs. 0.38%).
Can I hold both FNCL and IAI?
You can, though the benefit is limited. At a correlation of 0.88, FNCL and IAI fall together far more often than not, so owning both adds complexity and a second expense ratio without much real diversification. Most investors are better served picking one.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.