The Invesco KBW High Dividend Yield Financial ETF (KBWD) was launched on 12/02/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $385.36 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.
Costs
Expense 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 13.84%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 4.60% of total assets, followed by Orchid Island Capital Inc (ORC) and Two Harbors Investment Corp (TWO).
The top 10 holdings account for about 37.85% of total assets under management.
Performance and Risk
The ETF has lost about -7% so far this year and is down about -0.93% in the last one year (as of 04/07/2025). In that past 52-week period, it has traded between $13.21 and $16.26.
The ETF has a beta of 1.16 and standard deviation of 21.14% 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.
Alternatives
Invesco 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. However, 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 $10.75 billion in assets, Financial Select Sector SPDR ETF has $46.64 billion. VFH has an expense ratio of 0.09% and XLF charges 0.08%.
Bottom Line
To 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.
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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 Reports
This article originally published on Zacks Investment Research (zacks.com).
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