Launched on 11/01/2011, the Invesco KBW Bank ETF (
KBWB Quick Quote KBWB - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Banking segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Invesco. It has amassed assets over $1.90 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Banking segment of the equity market. KBWB seeks to match the performance of the KBW Nasdaq Bank index before fees and expenses.
The KBW Nasdaq Bank index is a modified-market capitalization-weighted index that seeks to reflect the performance of companies that do business as banks or thrifts that are publicly-traded in the US.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 3.02%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Wells Fargo & Co (
WFC Quick Quote WFC - Free Report) accounts for about 8.53% of total assets, followed by Pnc Financial Services Group Inc/the ( PNC Quick Quote PNC - Free Report) and Bank Of America Corp ( BAC Quick Quote BAC - Free Report) .
The top 10 holdings account for about 59.12% of total assets under management.
Performance and Risk
The ETF has lost about -22.30% so far this year and is down about -16.05% in the last one year (as of 06/28/2022). In that past 52-week period, it has traded between $51.43 and $75.75.
The ETF has a beta of 1.26 and standard deviation of 39.45% for the trailing three-year period, making it a high risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.
Invesco KBW Bank ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, KBWB is an excellent option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NASDAQ Bank ETF (
FTXO Quick Quote FTXO - Free Report) tracks Nasdaq US Smart Banks Index and the SPDR S&P Bank ETF ( KBE Quick Quote KBE - Free Report) tracks S&P Banks Select Industry Index. First Trust NASDAQ Bank ETF has $234.33 million in assets, SPDR S&P Bank ETF has $2.22 billion. FTXO has an expense ratio of 0.60% and KBE charges 0.35%. Bottom Line
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