The SPDR S&P Regional Banking ETF (
KRE Quick Quote KRE - Free Report) was launched on 06/19/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Regional Banks segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Regional Banks is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.43 billion, making it one of the largest ETFs attempting to match the performance of the Financials - Regional Banks segment of the equity market. KRE seeks to match the performance of the S&P Regional Banks Select Industry Index before fees and expenses.
This Index is a modified equal-weighted index that seeks to reflect the performance of publicly traded companies that do business as regional banks or thrifts. The Regional Banking Index is currently comprised of common stocks of leading regional banks or thrifts listed on the NYSE or another U.S. national securities exchange, or NASDAQ/NMS.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.93%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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.
Looking at individual holdings, Svb Financial Group (
SIVB Quick Quote SIVB - Free Report) accounts for about 2.12% of total assets, followed by Silvergate Capital Corp. Class A ( SI Quick Quote SI - Free Report) and Pnc Financial Services Group Inc. ( PNC Quick Quote PNC - Free Report) .
The top 10 holdings account for about 17.23% of total assets under management.
Performance and Risk
So far this year, KRE return is roughly 42.15%, and is up about 84.52% in the last one year (as of 10/21/2021). During this past 52-week period, the fund has traded between $39.50 and $72.50.
The ETF has a beta of 1.37 and standard deviation of 40.79% for the trailing three-year period, making it a high risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
SPDR S&P Regional Banking ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, KRE is a sufficient option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Invesco KBW Regional Banking ETF (
KBWR Quick Quote KBWR - Free Report) tracks KBW Nasdaq Regional Banking Index and the iShares U.S. Regional Banks ETF ( IAT Quick Quote IAT - Free Report) tracks Dow Jones U.S. Select Regional Banks Index. Invesco KBW Regional Banking ETF has $78 million in assets, iShares U.S. Regional Banks ETF has $1.39 billion. KBWR has an expense ratio of 0.35% and IAT charges 0.41%. 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.