A smart beta exchange traded fund, the State Street SPDR S&P Regional Banking ETF (KRE) debuted on 06/19/2006, and offers 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $3.93 billion, this makes it one of the largest ETFs in the Financials ETFs. KRE is managed by State Street Investment Management. This particular fund seeks to match the performance of the S&P Regional Banks Select Industry Index before fees and expenses.
The S&P Regional Banks Select Industry Index represents the regional banks segment of the S&P Total Market Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for KRE are 0.35%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.28%.
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.
When you look at individual holdings, Popular Inc (BPOP) accounts for about 2.16% of the fund's total assets, followed by Webster Financial Corp (WBS) and Cullen/frost Bankers Inc (CFR).
Its top 10 holdings account for approximately 20.26% of KRE's total assets under management.
Performance and Risk
So far this year, KRE return is roughly 6.93%, and is up roughly 42.74% in the last one year (as of 04/13/2026). During this past 52-week period, the fund has traded between $50.12 and $73.63.
The ETF has a beta of 0.87 and standard deviation of 29.67% for the trailing three-year period, making it a high risk choice in the space. With about 146 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Regional Banking ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco Bloomberg Financial Data Providers ETF (FDIQ) tracks BLOOMBERG FINANCIAL DATA PROVIDERS INDEX and the iShares U.S. Regional Banks ETF (IAT) tracks Dow Jones U.S. Select Regional Banks Index. Invesco Bloomberg Financial Data Providers ETF has $50.54 million in assets, iShares U.S. Regional Banks ETF has $602.39 million. FDIQ has an expense ratio of 0.35% and IAT changes 0.38%.
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
State Street SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).