European Financials Are Beating U.S. Rivals in 2026. Should You Chase the Rally? | The Motley Fool

European financials are outperforming U.S. peers in 2026, according to The Motley Fool, reshaping how investors view regional exposure. The State Street SPDR ETF XLF tracks 76 U.S.-listed financials, while iShares EUFN targets 84 developed European financials. Expense ratios favor XLF at 0.08%, versus EUFN’s 0.22%, while trailing yields favor EUFN at 3.40% against XLF’s 1.50%. Distributions over the last 12 months stood at $0.79 for XLF and $1.33 for EUFN. Leading XLF holdings include Berkshire Hathaway, JPMorgan Chase, and Visa, whereas EUFN’s top positions are HSBC, Banco Santander, and Allianz. EUFN’s introduction in 2010 contrasts with XLF’s 1998 inception. European banks have benefited from cheaper valuations, defense spending, fiscal stimulus, and a stronger euro, but currency risk and higher volatility remain concerns. The report cautions that while Europe has outpaced the U.S. so far this year, persistent risks and a higher fee burden (sixfold higher than XLF) demand careful, long-term evaluation.