The Invesco KBW High Dividend Yield Financial ETF (
KBWD Quick Quote KBWD - Free Report) was launched on 12/02/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Broad 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 - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
The fund is sponsored by Invesco. It has amassed assets over $348.60 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Broad segment of the equity market. KBWD seeks to match the performance of the KBW Nasdaq Financial Sector Dividend Yield Index before fees and expenses.
The KBW Nasdaq Financial Sector Dividend Yield Index is a dividend yield weighted index seeking to reflect the performance of approximately 24 to 40 publicly listed financial companies engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the US.
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 3.84%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 12.30%.
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, Armour Residential Reit Inc (
ARR Quick Quote ARR - Free Report) accounts for about 7.01% of total assets, followed by Orchid Island Capital Inc ( ORC Quick Quote ORC - Free Report) and Agnc Investment Corp ( AGNC Quick Quote AGNC - Free Report) .
The top 10 holdings account for about 38.87% of total assets under management.
Performance and Risk
Year-to-date, the Invesco KBW High Dividend Yield Financial ETF has added roughly 9.48% so far, and is up about 3.39% over the last 12 months (as of 11/20/2023). KBWD has traded between $13.12 and $17.63 in this past 52-week period.
The ETF has a beta of 1.44 and standard deviation of 21.08% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Invesco KBW High Dividend Yield Financial 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, KBWD 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.
Vanguard Financials ETF (
VFH Quick Quote VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF ( XLF Quick Quote XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $7.87 billion in assets, Financial Select Sector SPDR ETF has $30.70 billion. VFH has an expense ratio of 0.10% and XLF charges 0.10%. Bottom Line
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