Designed to provide broad exposure to the Financials - Banking segment of the equity market, the SPDR S&P Bank ETF (KBE) is a passively managed exchange traded fund launched on November 8, 2005.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by State Street Investment Management. It has amassed assets over $1.37 billion, making it one of the larger ETFs attempting to match the performance of the Financials - Banking segment of the equity market. KBE seeks to match the performance of the S&P Banks Select Industry Index before fees and expenses.
The S&P Banks Select Industry Index is a modified equal-weighted index that seeks to reflect the performance of publicly traded companies that do business as banks or thrifts. The Bank Index is currently comprised of common stocks of national money centers and leading regional banks or thrifts listed on the NYSE or another U.S. national securities exchange, or NASDAQ/National Market System.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.56%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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, Comerica Inc (CMA) accounts for about 1.22% of total assets, followed by Eastern Bankshares Inc (EBC) and Fb Financial Corp (FBK).
The top 10 holdings account for about 11.19% of total assets under management.
Performance and Risk
The ETF has added about 4.28% and was up about 8.13% so far this year and in the past one year (as of 11/05/2025), respectively. KBE has traded between $45.85 and $62.76 during this last 52-week period.
The ETF has a beta of 1.02 and standard deviation of 28.17% for the trailing three-year period, making it a high risk choice in the space. With about 104 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Bank ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, KBE is an outstanding option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NASDAQ Bank ETF (FTXO) tracks Nasdaq US Smart Banks Index and the Invesco KBW Bank ETF (KBWB) tracks KBW Nasdaq Bank index. First Trust NASDAQ Bank ETF has $238.26 million in assets, Invesco KBW Bank ETF has $5.66 billion. FTXO has an expense ratio of 0.6%, and KBWB charges 0.35%.
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.
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
SPDR S&P Bank ETF (KBE): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
