Should You Invest in the Invesco KBW Bank ETF (KBWB)?
Designed to provide broad exposure to the Financials - Banking segment of the equity market, the Invesco KBW Bank ETF (KBWB) is a passively managed exchange traded fund launched on 11/01/2011.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $1.25 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Banking segment of the equity market. KBWB seeks to match the performance of the KBW Nasdaq Bank index before fees and expenses.
The KBW Nasdaq Bank index is a modified-market capitalization-weighted index that seeks to reflect the performance of companies that do business as banks or thrifts that are publicly-traded in the US.
Costs
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 this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 3.75%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that 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, Jpmorgan Chase & Co (JPM) accounts for about 8.47% of total assets, followed by Wells Fargo & Co (WFC) and Goldman Sachs Group Inc/the (GS).
The top 10 holdings account for about 61.61% of total assets under management.
Performance and Risk
The ETF has lost about -15.39% and is down about -20.56% so far this year and in the past one year (as of 11/16/2023), respectively. KBWB has traded between $36.74 and $59.12 during this last 52-week period.
The ETF has a beta of 1.21 and standard deviation of 28.82% for the trailing three-year period, making it a high risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco KBW Bank ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. KBWB, then, is not the best option for investors seeking exposure to the Financials ETFs segment of the market. However, there are better ETFs in the space to consider.
First Trust NASDAQ Bank ETF (FTXO) tracks Nasdaq US Smart Banks Index and the SPDR S&P Bank ETF (KBE) tracks S&P Banks Select Industry Index. First Trust NASDAQ Bank ETF has $124.77 million in assets, SPDR S&P Bank ETF has $1.14 billion. FTXO has an expense ratio of 0.60% and KBE charges 0.35%.
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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Invesco KBW Bank ETF (KBWB): ETF Research Reports
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
Wells Fargo & Company (WFC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
SPDR S&P Bank ETF (KBE): ETF Research Reports
First Trust NASDAQ Bank ETF (FTXO): ETF Research Reports
