Banking ETFs: How Do KBWB and FTXO Compare to Each Other?

Invesco KBW Bank ETF carries a lower expense ratio and higher assets under management (AUM) compared to First Trust Nasdaq Bank ETF

First Trust Nasdaq Bank ETF manages a larger portfolio of 42 holdings but has seen lower 1-year total returns than Invesco KBW Bank ETF

Invesco KBW Bank ETF provides a slightly higher trailing-12-month dividend yield while maintaining a more concentrated basket of 26 securities

The Invesco KBW Bank ETF (NASDAQ:KBWB) offers a lower-cost entry into the banking sector with higher recent returns, while the First Trust Nasdaq Bank ETF (NASDAQ:FTXO) provides broader diversification.

Both funds target the domestic banking sector but follow different indexing methodologies to capture the industry performance. While the Invesco KBW Bank ETF tracks a market-cap-weighted index of money centers and regional banks, the First Trust Nasdaq Bank ETF uses a “smart” indexing approach focused on liquidity and fundamental factors such as volatility and growth.

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Invesco fund is more affordable, charging an expense ratio of 0.35% compared to the 0.6% for the First Trust fund. Additionally, the Invesco fund offers a higher payout for income-seeking investors through its distribution yield.

Invesco KBW Bank ETF (KBWB) focuses entirely on the financial services sector, with 26 holdings representing 100% of the portfolio. Launched in 2011, it weights its positions using a modified market-cap approach to track national money center banks and thrifts. Its largest positions include Morgan Stanley (NYSE:MS) at 9.28%, The Goldman Sachs Group (NYSE:GS) at 8.85%, and Bank of America (NYSE:BAC) at 7.84%. Over the trailing 12 months, the Invesco fund has paid $1.80 per share in dividends.