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.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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 6, placing it in top 38%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $3.18 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.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 2.45%.
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, First Horizon Corporation (
FHN Quick Quote FHN - Free Report) accounts for about 2.81% of total assets, followed by M&t Bank Corporation ( MTB Quick Quote MTB - Free Report) and People's United Financial Inc. .
The top 10 holdings account for about 21.72% of total assets under management.
Performance and Risk
The ETF has lost about -17.82% so far this year and is down about -8.22% in the last one year (as of 06/30/2022). In that past 52-week period, it has traded between $56.85 and $78.78.
The ETF has a beta of 1.21 and standard deviation of 41.62% for the trailing three-year period, making it a high risk choice in the space. With about 139 holdings, it effectively diversifies company-specific risk.
SPDR S&P Regional Banking ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, KRE is an outstanding 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.
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 $73.37 million in assets, iShares U.S. Regional Banks ETF has $845.75 million. KBWR has an expense ratio of 0.35% and IAT charges 0.41%. Bottom Line
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