Evaluating Financial ETFs: Performance and Cost Give KBWB the Edge Over FTXO
KBWB charges half First Trust's fee and delivered stronger five-year returns, but carries higher volatility. Both funds offer full financial sector exposure with different diversification strategies.
The Invesco KBW Bank ETF (KBWB) and the First Trust Nasdaq Bank ETF (FTXO) are two specialized bank ETFs that offer exposure to the U.S. financial sector. While both funds provide similar exposure, they differ in several key aspects. KBWB has a lower expense ratio at 0.35% compared to FTXO's 0.60%. Additionally, KBWB offers a higher dividend yield of 2.1% as opposed to FTXO's 1.9%.
Both funds aim to track different banking indices – KBWB follows the KBW Nasdaq Bank Index using a market-cap weighted strategy, while FTXO tracks the Nasdaq U.S. Smart Banks Index using a book-value weighted approach and includes 50 stocks. Since its launch in 2011, KBWB has generated a total return of 41% with a 7.1% CAGR since 2021, whereas FTXO has delivered a lower 29% total return with a 5.2% CAGR.
These factors make KBWB a more cost-effective and performance-driven option for investors seeking exposure to the U.S. banking sector.
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