The Invesco KBW High Dividend Yield Financial ETF (KBWD) made its debut on 12/02/2010, and is a smart beta exchange traded fund that provides 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 & Index
The fund is sponsored by Invesco. It has amassed assets over $424.25 million, making 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 Expenses
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.
Operating expenses on an annual basis are 5.39% for this ETF, which makes it one of the most expensive products in the space.
KBWD's 12-month trailing dividend yield is 13.97%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For KBWD, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
When you look at individual holdings, Fs Kkr Capital Corp (FSK) accounts for about 4.34% of the fund's total assets, followed by New Mountain Finance Corp (NMFC) and Orchid Island Capital Inc (ORC).
KBWD's top 10 holdings account for about 38.1% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco KBW High Dividend Yield Financial ETF has lost about -1.88% so far, and it's up approximately 0.22% over the last 12 months (as of 07/20/2026). KBWD has traded between $11.98 $14.71 in this past 52-week period.
KBWD has a beta of 1.01 and standard deviation of 17.69% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 42 holdings, it has more concentrated exposure than peers .
Alternatives
Invesco 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 Index Fund ETF Shares (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 Index Fund ETF Shares has $13.35 billion in assets, State Street Financial Select Sector SPDR ETF has $54.54 billion. VFH has an expense ratio of 0.09% and XLF changes 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 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.Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Get it now >>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
This article originally published on Zacks Investment Research (zacks.com).