The Invesco KBW High Dividend Yield Financial ETF (KBWD) 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.
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 are also funds of convenience, offering many 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 10, placing it in bottom 38%.
The fund is sponsored by Invesco. It has amassed assets over $209.11 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.
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.
Annual operating expenses for this ETF are 1.58%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 14.73%.
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 98.20% of the portfolio.
Looking at individual holdings, Orchid Island Capital Inc (ORC) accounts for about 4.81% of total assets, followed by Prospect Capital Corp (PSEC) and Fs Kkr Capital Corp (FSK).
The top 10 holdings account for about 37.02% of total assets under management.
Performance and Risk
The ETF has lost about -38.26% and is down about -32.76% so far this year and in the past one year (as of 07/10/2020), respectively. KBWD has traded between $9.28 and $22.94 during this last 52-week period.
The ETF has a beta of 1.42 and standard deviation of 30.68% for the trailing three-year period, making it a medium risk choice in the space. With about 41 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 excellent 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) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $5.48 billion in assets, Financial Select Sector SPDR ETF has $16.03 billion. VFH has an expense ratio of 0.10% and XLF charges 0.13%.
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 High Dividend Yield Financial ETF (KBWD): ETF Research Reports
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Orchid Island Capital, Inc. (ORC) : Free Stock Analysis Report
Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
Vanguard Financials ETF (VFH): ETF Research Reports
FS KKR Capital Corp. (FSK) : Free Stock Analysis Report
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