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 December 2, 2010.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 2, placing it in top 13%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $425.56 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
Since 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.
Annual operating expenses for this ETF are 4.93%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 12.62%.
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, Orchid Island Capital Inc (ORC) accounts for about 5.33% of total assets, followed by Armour Residential Reit Inc (ARR) and Dynex Capital Inc (DX).
The top 10 holdings account for about 38.43% of total assets under management.
Performance and Risk
The ETF return is roughly 5.49% so far this year and is up about 1.83% in the last one year (as of 12/15/2025). In that past 52-week period, it has traded between $12.37 and $15.69.
The ETF has a beta of 1.09 and standard deviation of 18.91% for the trailing three-year period, making it a medium risk choice in the space. With about 43 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. 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 State Street Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $13.41 billion in assets, State Street Financial Select Sector SPDR ETF has $53.41 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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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