FTXO vs KBWB

FTXODFirst Trust Nasdaq Bank ETF

KBWBBInvesco KBW Bank ETF

In short

FTXO Most bank ETFs just buy the sector by size. FTXO screens US banks on value, momentum and profitability, then holds roughly 40 that clear the bar. A stock-picker's bank fund, run by rules instead of a manager.

KBWB Banks, and nothing but. KBWB has tracked the KBW Nasdaq Bank Index since 2011, packing roughly two dozen US bank stocks into one ticker with no insurers or asset managers diluting the theme.

Stated mandate

FTXO The fund seeks to track the performance of the Nasdaq US Smart BanksTM Index before fees and expenses, using a replication strategy.

KBWB The Fund seeks to track the KBW Nasdaq Bank Index and normally invests at least 90% of its total assets in securities represented by that index.

Why people hold it

• FTXO Rules do the picking: the Nasdaq US Smart Banks Index ranks US banks on value, momentum and profitability, and the fund replicates it rather than weighting purely by size.ftportfolios.com
• A tight book of roughly 40 banks, so individual names carry real weight instead of being diluted across the whole sector.ftportfolios.com
• Live since 2016, with a track record of hugging its index very closely and paying distributions quarterly.

• KBWB Undiluted US bank exposure: it tracks the KBW Nasdaq Bank Index and normally keeps at least 90% of assets in that index's securities.
• A multi-billion-dollar fund that trades actively, so entering and exiting is usually straightforward even on noisy days for the sector.
• 0.35% expense ratio, the going rate in bank funds and the same sticker as SPDR rivals KBE and KRE.
• Live since 2011 and one of the stronger builds in its bank-fund peer group, with a mandate that has stayed put.

Worth knowing

• FTXO The screening costs: 0.60% a year against 0.35% for plain-vanilla bank funds like KBE, KBWB and KRE. You are paying for the ranking process, not just sector exposure.
• Screens can tilt it away from the biggest banks, so its path can look quite different from a standard market-cap bank index in either direction.ftportfolios.com
• Mid-sized and moderately traded rather than a category heavyweight, so spreads can run wider than the largest bank ETFs.

• KBWB Around 26 holdings in a single industry. When banks wobble, there is nothing else in the basket to absorb it.
• Bank shares live and die by rates, credit conditions and regulation, which makes for a bumpier ride than a broad-market fund.
• Distributions land quarterly, not monthly, and the amount moves with what the underlying banks choose to pay.

Full FTXO profile⁠

Full KBWB profile⁠