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Is SPDR S&P Regional Banking ETF (KRE) a Strong ETF Right Now?
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The SPDR S&P Regional Banking ETF (KRE - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by State Street Global Advisors. KRE has been able to amass assets over $2.78 billion, making it one of the largest ETFs in the Financials ETFs. KRE, before fees and expenses, seeks to match the performance of the S&P Regional Banks Select Industry Index.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 3.17%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
KRE's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
Looking at individual holdings, Western Alliance Bancorp (WAL - Free Report) accounts for about 3.59% of total assets, followed by Zions Bancorp Na (ZION - Free Report) and Truist Financial Corp (TFC - Free Report) .
Its top 10 holdings account for approximately 31.47% of KRE's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Regional Banking ETF has lost about -5.45% so far, and is down about -11.37% over the last 12 months (as of 03/11/2024). KRE has traded between $36.08 and $53.82 in this past 52-week period.
The ETF has a beta of 1.09 and standard deviation of 31.18% for the trailing three-year period, making it a high risk choice in the space. With about 141 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Regional Banking ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
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 $57.01 million in assets, iShares U.S. Regional Banks ETF has $637.76 million. KBWR has an expense ratio of 0.35% and IAT charges 0.40%.
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?
The SPDR S&P Regional Banking ETF (KRE - Free Report) made its debut on 06/19/2006, and is a smart beta exchange traded fund that provides 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by State Street Global Advisors. KRE has been able to amass assets over $2.78 billion, making it one of the largest ETFs in the Financials ETFs. KRE, before fees and expenses, seeks to match the performance of the S&P Regional Banks Select Industry Index.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 3.17%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
KRE's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
Looking at individual holdings, Western Alliance Bancorp (WAL - Free Report) accounts for about 3.59% of total assets, followed by Zions Bancorp Na (ZION - Free Report) and Truist Financial Corp (TFC - Free Report) .
Its top 10 holdings account for approximately 31.47% of KRE's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Regional Banking ETF has lost about -5.45% so far, and is down about -11.37% over the last 12 months (as of 03/11/2024). KRE has traded between $36.08 and $53.82 in this past 52-week period.
The ETF has a beta of 1.09 and standard deviation of 31.18% for the trailing three-year period, making it a high risk choice in the space. With about 141 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Regional Banking ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
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 $57.01 million in assets, iShares U.S. Regional Banks ETF has $637.76 million. KBWR has an expense ratio of 0.35% and IAT charges 0.40%.
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.