Is Invesco KBW High Dividend Yield Financial ETF (KBWD) a Strong ETF Right Now?

Designed to provide broad exposure to the Financials ETFs category of the market, the Invesco KBW High Dividend Yield Financial ETF (KBWD) is a smart beta exchange traded fund launched on 12/02/2010.What Are Smart Beta ETFs?Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.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.However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.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 & IndexManaged by Invesco, KBWD has amassed assets over $385.39 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, KBWD seeks to match the performance of the KBW Nasdaq Financial Sector Dividend Yield Index.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.Cost & Other ExpensesExpense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.Operating expenses on an annual basis are 2.02% for this ETF, which makes it one of the most expensive products in the space.It has a 12-month trailing dividend yield of 12.30%.Sector Exposure and Top HoldingsETFs 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.Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.Looking at individual holdings, Trinity Capital Inc (TRIN) accounts for about 3.89% of total assets, followed by Agnc Investment Corp (AGNC) and Prospect Capital Corp (PSEC).The top 10 holdings account for about 36.54% of total assets under management.Performance and RiskYear-to-date, the Invesco KBW High Dividend Yield Financial ETF has added about 3.05% so far, and was up about 26.76% over the last 12 months (as of 10/30/2024). KBWD has traded between $13.48 and $16.26 in this past 52-week period.The fund has a beta of 1.42 and standard deviation of 21.02% for the trailing three-year period, which makes KBWD a medium risk choice in this particular space. With about 40 holdings, it has more concentrated exposure than peers.AlternativesInvesco KBW High Dividend Yield Financial ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.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 $10.55 billion in assets, Financial Select Sector SPDR ETF has $44.56 billion. VFH has an expense ratio of 0.10% and XLF charges 0.09%.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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco KBW High Dividend Yield Financial ETF (KBWD): ETF Research Reports AGNC Investment Corp. (AGNC): Free Stock Analysis Report Financial Select Sector SPDR ETF (XLF): ETF Research Reports Prospect Capital Corporation (PSEC): Free Stock Analysis Report Vanguard Financials ETF (VFH): ETF Research Reports Trinity Capital Inc. (TRIN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks