IAT Bets on Main Street Banking. FTXO Bets on Wall Street Giants. Which Is the Better Fit for Your Portfolio?
Key Points
iShares U.S. Regional Banks ETF offers a lower expense ratio and higher dividend yield than First Trust Nasdaq Bank ETF.
First Trust Nasdaq Bank ETF achieved higher 5-year total returns despite its higher management fees.
iShares U.S. Regional Banks ETF concentrates on regional lenders while First Trust Nasdaq Bank ETF includes massive money-center institutions.
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The iShares U.S. Regional Banks ETF (NYSEMKT:IAT) provides lower-cost exposure to regional lenders and higher dividends, while the First Trust Nasdaq Bank ETF (NASDAQ:FTXO) includes diversified money-center banking giants.
Both exchange-traded funds target the financial sector but differ significantly in their focus. Investors looking for pure regional bank exposure may lean toward IAT, whereas FTXO tracks a smart-beta index that includes some of the largest diversified financial institutions in the world.
Snapshot (cost & size)
| Metric | FTXO | IAT |
|---|---|---|
| Issuer | First Trust | iShares |
| Expense ratio | 0.60% | 0.38% |
| 1-yr return (as of May 20, 2026) | 22.20% | 22.50% |
| Dividend yield | 1.80% | 2.80% |
| Beta | 0.92 | 0.90 |
| AUM | $286.5 million | $597.7 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares U.S. Regional Banks ETF is the more affordable option with a 0.38% expense ratio, compared to 0.60% for the First Trust fund. Additionally, the iShares fund provides a higher payout for income-focused investors, with a 1.06 percentage point yield advantage.
Performance & risk comparison
| Metric | FTXO | IAT |
|---|---|---|
| Max drawdown (5 yr) | (46.60%) | (55.50%) |
| Growth of $1,000 over 5 years (total return) | $1,311 | $1,084 |
What's inside
The iShares U.S. Regional Banks ETF tracks the regional banking sub-sector, holding 31 stocks. Its largest positions include PNC Financial Services Group (NYSE:PNC) at 14.40%, US Bancorp (NYSE:USB) at 13.93%, and Truist Financial (NYSE:TFC) at 9.96%. Financial Services stocks make up 100% of the portfolio. Launched in 2006, the fund has a trailing-12-month dividend of $1.62 per share.
In contrast, the First Trust Nasdaq Bank ETF tracks the Nasdaq US Smart Banks Index, which screens for liquidity and value. Its 42 holdings include large-cap names like Citigroup (NYSE:C) at 8.75%, Bank of America (NYSE:BAC) at 7.94%, and JPMorgan Chase (NYSE:JPM) at 7.76%. Like its counterpart, the portfolio is 100% Financial Services. This fund was launched in 2016 and paid $0.68 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Most investors think of banking as a single industry, but regional banks and megabanks operate in fundamentally different ways and respond differently to economic conditions. Regional banks are your Main Street lenders. They take deposits from local communities and make loans to small businesses, homeowners, and consumers in their geographic footprint. Their fortunes are closely tied to local economic health, interest rate margins, and credit quality in their specific markets.
Megabanks like JPMorgan, Bank of America, and Wells Fargo are Wall Street institutions operating at global scale, with investment banking, trading operations, and wealth management divisions that regional banks simply do not have. When deal activity picks up or markets boom, megabanks benefit from revenue streams that have nothing to do with traditional lending.
That’s the key to choosing between these ETFs. IAT focuses entirely on regional banks, offering a lower-cost, higher-yield entry point into that Main Street lending story. FTXO concentrates in megabanks, betting on institutions best positioned to benefit from deregulation, rising deal activity, and global financial market growth. Both charge more than many broad market funds, reflecting the narrower focus. The right choice here ultimately depends on which banking story you find more compelling.
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Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Sara Appino has no position in any of the stocks mentioned. 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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