The financial sector is up 4.18% in the past month, benefitting from the Federal Reserve’s final interest rate cut of the year. Banks and lenders are poised for net interest margin gains in 2026. Investors eye the Vanguard Financials ETF for broad exposure to top-rated companies in the sector.

After a strong finish in 2024, the financial sector is carrying momentum into 2026 with a 4.18% rise in the past month. The sector, which houses banks, insurance companies, and fintech firms, is well-positioned for a strong start to the new year after the Fed’s interest rate cut.

Billionaire hedge fund manager Ronald Baron advises diversifying out of tech and into financials post-Fed rate cut. Lower rates mean increased lending, potentially boosting profitability. Financials are expected to benefit from lower default levels and balanced allocations in the Vanguard Financials ETF.

The Vanguard Financials ETF offers diversified exposure to banking, capital markets, and insurance industries. Top holdings include JPMorgan Chase, Berkshire Hathaway, and Mastercard. With a low expense ratio and strong analyst ratings, the ETF is attracting institutional investors and showing minimal short interest.

Financials stand to gain from lower rates, increasing loan volumes offsetting margin compression. The sector is set for growth as interest rates fall post-Fed’s final rate cut of 2025. The Vanguard Financials ETF offers a solid investment opportunity for investors seeking exposure to top companies in the sector.

Read more at Yahoo Finance: This ETF Caught a Major Tailwind After the Fed’s Rate Cut