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Is SPDR S&P Regional Banking ETF (KRE) a Strong ETF Right Now?
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Making its debut on 06/19/2006, smart beta exchange traded fund SPDR S&P Regional Banking ETF (KRE - Free Report) provides investors broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
Managed by State Street Global Advisors, KRE has amassed assets over $2.52 billion, making it one of the largest ETFs in the Financials ETFs. This particular fund 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.
Cost & Other Expenses
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.
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 2.37%.
Sector Exposure and Top Holdings
ETFs offer 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.
For KRE, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
Looking at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 2.34% of total assets, followed by Huntington Bancshares Incorporated (HBAN - Free Report) and Citizens Financial Group Inc. (CFG - Free Report) .
Its top 10 holdings account for approximately 21.24% of KRE's total assets under management.
Performance and Risk
The ETF has added roughly 5.75% so far this year and is down about -11.18% in the last one year (as of 02/01/2023). In the past 52-week period, it has traded between $56.83 and $75.72.
The ETF has a beta of 1.14 and standard deviation of 42.09% for the trailing three-year period, making it a high risk choice in the space. With about 145 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 $67.63 million in assets, iShares U.S. Regional Banks ETF has $744.51 million. KBWR has an expense ratio of 0.35% and IAT charges 0.39%.
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?
Making its debut on 06/19/2006, smart beta exchange traded fund SPDR S&P Regional Banking ETF (KRE - Free Report) provides investors broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
Managed by State Street Global Advisors, KRE has amassed assets over $2.52 billion, making it one of the largest ETFs in the Financials ETFs. This particular fund 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.
Cost & Other Expenses
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.
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 2.37%.
Sector Exposure and Top Holdings
ETFs offer 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.
For KRE, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
Looking at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 2.34% of total assets, followed by Huntington Bancshares Incorporated (HBAN - Free Report) and Citizens Financial Group Inc. (CFG - Free Report) .
Its top 10 holdings account for approximately 21.24% of KRE's total assets under management.
Performance and Risk
The ETF has added roughly 5.75% so far this year and is down about -11.18% in the last one year (as of 02/01/2023). In the past 52-week period, it has traded between $56.83 and $75.72.
The ETF has a beta of 1.14 and standard deviation of 42.09% for the trailing three-year period, making it a high risk choice in the space. With about 145 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 $67.63 million in assets, iShares U.S. Regional Banks ETF has $744.51 million. KBWR has an expense ratio of 0.35% and IAT charges 0.39%.
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.