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Is SPDR S&P Regional Banking ETF (KRE) a Strong ETF Right Now?
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Designed to provide broad exposure to the Financials ETFs category of the market, the SPDR S&P Regional Banking ETF (KRE - Free Report) is a smart beta exchange traded fund launched on 06/19/2006.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $3.81 billion, this makes it one of the largest ETFs in the Financials ETFs. KRE is managed by State Street Global Advisors. Before fees and expenses, KRE seeks to match the performance of the S&P Regional Banks Select Industry Index.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.35%.
It's 12-month trailing dividend yield comes in at 2.26%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.
When you look at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 2.81% of the fund's total assets, followed by M&t Bank Corporation (MTB - Free Report) and People's United Financial Inc. .
KRE's top 10 holdings account for about 21.72% of its total assets under management.
Performance and Risk
So far this year, KRE has lost about -13.52%, and is down about -10.92% in the last one year (as of 05/18/2022). During this past 52-week period, the fund has traded between $59.87 and $78.78.
KRE has a beta of 1.22 and standard deviation of 41.44% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 139 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Regional Banking ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Regional Banking ETF (KBWR - Free Report) tracks KBW Nasdaq Regional Banking Index and the iShares U.S. Regional Banks ETF (IAT - Free Report) tracks Dow Jones U.S. Select Regional Banks Index. Invesco KBW Regional Banking ETF has $81.37 million in assets, iShares U.S. Regional Banks ETF has $947.81 million. KBWR has an expense ratio of 0.35% and IAT charges 0.41%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is SPDR S&P Regional Banking ETF (KRE) a Strong ETF Right Now?
Designed to provide broad exposure to the Financials ETFs category of the market, the SPDR S&P Regional Banking ETF (KRE - Free Report) is a smart beta exchange traded fund launched on 06/19/2006.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $3.81 billion, this makes it one of the largest ETFs in the Financials ETFs. KRE is managed by State Street Global Advisors. Before fees and expenses, KRE seeks to match the performance of the S&P Regional Banks Select Industry Index.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.35%.
It's 12-month trailing dividend yield comes in at 2.26%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.
When you look at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 2.81% of the fund's total assets, followed by M&t Bank Corporation (MTB - Free Report) and People's United Financial Inc. .
KRE's top 10 holdings account for about 21.72% of its total assets under management.
Performance and Risk
So far this year, KRE has lost about -13.52%, and is down about -10.92% in the last one year (as of 05/18/2022). During this past 52-week period, the fund has traded between $59.87 and $78.78.
KRE has a beta of 1.22 and standard deviation of 41.44% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 139 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Regional Banking ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Regional Banking ETF (KBWR - Free Report) tracks KBW Nasdaq Regional Banking Index and the iShares U.S. Regional Banks ETF (IAT - Free Report) tracks Dow Jones U.S. Select Regional Banks Index. Invesco KBW Regional Banking ETF has $81.37 million in assets, iShares U.S. Regional Banks ETF has $947.81 million. KBWR has an expense ratio of 0.35% and IAT charges 0.41%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.