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

Making its debut on 12/02/2010, smart beta exchange traded fund Invesco KBW High Dividend Yield Financial ETF (KBWD) provides investors broad exposure to the Financials ETFs category of the market.What Are Smart Beta ETFs?The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.Fund Sponsor & IndexKBWD is managed by Invesco, and this fund has amassed over $437.18 million, which makes 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 ExpensesSince 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.With one of the most expensive products in the space, this ETF has annual operating expenses of 2.02%.It has a 12-month trailing dividend yield of 11.80%.Sector Exposure and Top HoldingsEven 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, Invesco Mortgage Capital Inc (IVR) accounts for about 4.53% of total assets, followed by Orchid Island Capital Inc (ORC) and Two Harbors Investment Corp (TWO).KBWD's top 10 holdings account for about 36.71% of its total assets under management.Performance and RiskSo far this year, KBWD has added about 7.85%, and was up about 15.13% in the last one year (as of 03/03/2025). During this past 52-week period, the fund has traded between $14.31 and $16.26.The ETF has a beta of 1.42 and standard deviation of 20.79% 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.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 $12.36 billion in assets, Financial Select Sector SPDR ETF has $54.69 billion. VFH has an expense ratio of 0.09% and XLF charges 0.08%.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 Two Harbors Investments Corp (TWO): Free Stock Analysis Report INVESCO MORTGAGE CAPITAL INC (IVR): Free Stock Analysis Report Financial Select Sector SPDR ETF (XLF): ETF Research Reports Orchid Island Capital, Inc. (ORC): Free Stock Analysis Report Vanguard Financials ETF (VFH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks