Regional Banks or Megabanks? These ETFs Make Very Different Bets on the Sector

Sara Appino, The Motley Fool

Wed, May 27, 2026 astatine 8:02 AM CDT 4 min read

Investors choosing betwixt State Street SPDR S&P Bank ETF (NYSEMKT:KBE) and First Trust Nasdaq Bank ETF (NASDAQ:FTXO) could measurement the State Street fund's little costs and broader diversification against the First Trust fund's caller momentum and concentrated absorption connected megacap fiscal institutions.

Both ETFs supply targeted vulnerability to the U.S. banking sector, but they instrumentality fundamentally antithetic paths to scope that goal. The State Street money casts a wider nett crossed the industry, whereas the First Trust money uses a smart-beta attack to prime and value its portfolio based connected circumstantial cardinal metrics.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

The State Street money is notably much affordable with a 0.35% disbursal ratio, redeeming investors $2.50 annually for each $1,000 invested compared to the First Trust fund. Additionally, KBE offers a higher payout with a 2.30% yield.

Performance & hazard examination

What's wrong

State Street SPDR S&P Bank ETF (NYSEMKT:KBE) offers vulnerability to 101 holdings, reflecting a modified equal-weighted strategy crossed sub-industries similar plus absorption and determination banking. Its largest positions see Apollo Global Management (NYSE:APO) astatine 1.17%, Voya Financial (NYSE:VOYA) astatine 1.16%, and Cathay General Bancorp (NASDAQ:CATY) astatine 1.12%. Launched successful 2005, the money has a trailing-12-month dividend of $1.48 per share. It seeks to way an scale that reduces attraction successful the industry's biggest players, with 100% of its assets successful fiscal services.

In contrast, First Trust Nasdaq Bank ETF (NASDAQ:FTXO) is overmuch tighter, holding lone 42 stocks. Its apical holdings see Citigroup (NYSE:C) astatine 8.75%, Bank of America (NYSE:BAC) astatine 7.94%, and JPMorgan Chase & Co. (NYSE:JPM) astatine 7.76%. Launched successful 2016, this money has a trailing-12-month dividend of $0.68 per share. While some funds absorption 100% connected fiscal services, the First Trust money uses the Nasdaq US Smart Banks Index to value its holdings based connected factors similar volatility, liquidity, and value.

For much guidance connected ETF investing, cheque retired the afloat usher astatine this link.