XLF holds the financial sector of the S&P 500, spanning banks, insurance companies, asset managers, capital markets firms and payment networks. JPMorgan Chase, Berkshire Hathaway, Visa and Mastercard are among the largest holdings. Bank earnings tend to benefit from a steep yield curve and healthy credit conditions, and suffer when credit quality deteriorates or loan losses rise. Visa and Mastercard are payment networks with different economics from banks and typically have steadier, more growth-oriented earnings. Berkshire Hathaway is a diversified conglomerate with insurance at its core, so it gives the fund exposure beyond traditional financial companies. The fund is used by investors to express views on interest rates, credit cycles and economic expansion.
