Designed to provide broad exposure to the Financials ETFs category of the market, the SPDR S&P Regional Banking ETF (KRE Quick QuoteKRE - Free Report) is a smart beta exchange traded fund launched on 06/19/2006.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by State Street Global Advisors, and has been able to amass over $3.64 billion, which makes it one of the larger ETFs in the Financials ETFs. 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.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for KRE are 0.35%, which makes it one of the least expensive products in the space.

KRE's 12-month trailing dividend yield is 2.54%.

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.

This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.

Looking at individual holdings, Zions Bancorp Na (ZION) accounts for about 2.61% of total assets, followed by Citizens Financial Group (CFG) and East West Bancorp Inc (EWBC).

KRE's top 10 holdings account for about 25.25% of its total assets under management.

Performance and Risk

The ETF return is roughly 3.31% and it's up approximately 8.92% so far this year and in the past one year (as of 07/30/2025), respectively. KRE has traded between $48.81 and $68.90 during this last 52-week period.

KRE has a beta of 0.89 and standard deviation of 31.72% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 147 holdings, it effectively diversifies company-specific risk .

Alternatives

SPDR S&P Regional Banking ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Invesco KBW Regional Banking ETF (KBWR) tracks KBW Nasdaq Regional Banking Index and the iShares U.S. Regional Banks ETF (IAT) tracks Dow Jones U.S. Select Regional Banks Index. Invesco KBW Regional Banking ETF has $51.03 million in assets, iShares U.S. Regional Banks ETF has $622.38 million. KBWR has an expense ratio of 0.35% and IAT changes 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.