FTXO vs. IAT: National Banking Giants vs. Regional Lenders -- Which ETF Is the Better Buy?
Key Points
iShares U.S. Regional Banks ETF (IAT) offers a lower expense ratio and higher dividend yield than First Trust Nasdaq Bank ETF (FTXO).
FTXO has delivered higher total returns and lower maximum drawdowns over the past five years.
IAT focuses exclusively on regional institutions while First Trust Nasdaq Bank ETF includes national banking giants.
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The First Trust Nasdaq Bank ETF (NASDAQ:FTXO) and the iShares U.S. Regional Banks ETF (NYSEMKT:IAT) both give investors exposure to the financial sector, but they take different roads to get there. One leans on national banking giants, while the other sticks exclusively to regional lenders. The result: one fund has delivered stronger five-year returns with less volatility, while the other carries lower fees and pays a higher dividend.
Snapshot (cost & size)
| Metric | IAT | FTXO |
|---|---|---|
| Issuer | iShares | First Trust |
| Expense ratio | 0.38% | 0.60% |
| 1-year return (as of July 7, 2026) | 25.51% | 24.99% |
| Dividend yield | 2.60% | 1.76% |
| Beta | 1.23 | 1.15 |
| AUM | $656.0 million | $301.8 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
IAT is the cheaper option, charging an expense ratio of 0.38% compared to FTXO's 0.60% -- a meaningful gap for cost-conscious investors. IAT also pays a higher dividend, making it more attractive for income-focused portfolios.
Performance & risk comparison
| Metric | IAT | FTXO |
|---|---|---|
| Max drawdown (5 yr) | (55.53%) | (46.57%) |
| Growth of $1,000 over 5 years (total return) | $1,323 | $1,593 |
What's inside
Launched in 2016, FTXO holds 50 positions and tracks the Nasdaq US Smart Banks Index, which screens stocks using volatility, value, and growth metrics rather than just market cap. Its top holdings are Citigroup (NYSE:C) at 9.0%, Bank of America (NYSE:BAC) at 8.1%, and JPMorgan Chase (NYSE:JPM) at 7.7%.
IAT is a more concentrated fund with 31 holdings, focused entirely on regional banks and steering clear of the financial giants that dominate FTXO. Its largest positions are PNC Financial Services Group (NYSE:PNC) at 15.0%, U.S. Bancorp (NYSE:USB) at 14.2%, and Truist Financial (NYSE:TFC) at 9.4%. IAT was launched in 2006.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The choice between FTXO and IAT ultimately comes down to what an investor wants from their financial exposure.
FTXO's tilt toward the biggest U.S. banks helps explain its steadier performance and smaller drawdowns. Diversified giants like JPMorgan and Bank of America tend to have more stable revenue streams than smaller regional players, since they generate income from investment banking, trading, and wealth management alongside traditional lending.
IAT's regional-only focus makes it a more concentrated bet on the health of mid-sized banks, which are typically more sensitive to interest-rate swings, local economic conditions, and loan-portfolio quality. That extra sensitivity is part of why IAT has trailed FTXO on returns and drawdowns over the past five years, but it's also why the fund can offer a higher yield -- regional banks often pay out more of their earnings to shareholders to attract income investors.
Neither approach is necessarily better. Someone looking for lower volatility and exposure to banks with more diversified revenue might lean toward FTXO. An investor more focused on income and willing to accept extra risk tied to regional economic cycles might prefer IAT's higher yield and lower expense ratio. Either way, both funds offer a straightforward way to gain broad exposure to the banking sector without picking individual stocks.
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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Andy Gould has positions in Truist Financial and U.S. Bancorp. The Motley Fool has positions in and recommends JPMorgan Chase, Truist Financial, and U.S. Bancorp. The Motley Fool has a disclosure policy.
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