Should You Invest in the Invesco KBW High Dividend Yield Financial ETF (KBWD)?

If you're interested in broad exposure to the Financials - Broad segment of the equity market, look no further than the Invesco KBW High Dividend Yield Financial ETF (KBWD), a passively managed exchange traded fund launched on 12/02/2010.Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.Additionally, sector ETFs offer convenient 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 1, placing it in top 6%.Index DetailsThe fund is sponsored by Invesco. It has amassed assets over $405.59 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.CostsExpense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.Annual operating expenses for this ETF are 2.02%, making it one of the most expensive products in the space.It has a 12-month trailing dividend yield of 11.74%.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, Trinity Capital Inc (TRIN) accounts for about 3.83% of total assets, followed by Fs Kkr Capital Corp (FSK) and Prospect Capital Corp (74348T102).The top 10 holdings account for about 35.58% of total assets under management.Performance and RiskSo far this year, KBWD has added roughly 8.39%, and is up about 17.50% in the last one year (as of 12/02/2024). During this past 52-week period, the fund has traded between $14.55 and $16.26.The ETF has a beta of 1.42 and standard deviation of 21.05% 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 sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. KBWD, then, is not the best option for investors seeking exposure to the Financials ETFs segment of the market. Instead, there are better ETFs in the space to 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 $11.63 billion in assets, Financial Select Sector SPDR ETF has $52.91 billion. VFH has an expense ratio of 0.10% and XLF charges 0.09%.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 Financial Select Sector SPDR ETF (XLF): ETF Research Reports Vanguard Financials ETF (VFH): ETF Research Reports FS KKR Capital Corp. (FSK): Free Stock Analysis Report 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