Broad Banking Exposure or Megabank Conviction: What KBE and FTXO Say About the Industry
Key Points
The State Street SPDR S&P Bank ETF offers a significantly lower expense ratio and a higher dividend yield than the First Trust Nasdaq Bank ETF.
First Trust Nasdaq Bank ETF has outperformed over the trailing 12 months but maintains a more concentrated portfolio of 42 holdings.
State Street SPDR S&P Bank ETF provides broader exposure with 101 holdings across multiple banking sub-industries using an equal-weighted approach.
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The State Street SPDR S&P Bank ETF (NYSEMKT:KBE) provides lower costs and higher yields, whereas the First Trust Nasdaq Bank ETF (NASDAQ:FTXO) offers a concentrated strategy that has delivered higher recent returns.
Both funds offer targeted exposure to the U.S. banking sector but employ distinct weighting methodologies. While one focuses on a concentrated group of high-liquidity stocks using a multi-factor approach, the other provides a much broader view of the industry through an equal-weighted strategy. This comparison examines how these structural differences impact return profiles and risk metrics.
Snapshot (cost & size)
| Metric | FTXO | KBE |
|---|---|---|
| Issuer | First Trust | SPDR |
| Expense ratio | 0.60% | 0.35% |
| 1-yr return (as of June 3, 2026) | 23.40% | 18.70% |
| Dividend yield | 1.80% | 2.30% |
| Beta | 0.90 | 0.90 |
| AUM | $281.1 million | $1.4 billion |
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.
With an expense ratio of 0.35%, the SPDR fund is the more affordable option, costing significantly less than the 0.60% charged by the First Trust fund. While both ETFs carry a beta of 0.90, KBE features a higher dividend yield and larger assets under management (AUM), which could appeal to investors seeking deeper liquidity.
Performance & risk comparison
| Metric | FTXO | KBE |
|---|---|---|
| Max drawdown (5 yr) | (46.60%) | (45.20%) |
| Growth of $1,000 over 5 years (total return) | $1,297.00 | $1,293.00 |
What's inside
State Street SPDR S&P Bank ETF (NYSEMKT:KBE) launched in 2005 and tracks an equal-weighted index with 101 holdings. This strategy captures the broad banking industry, including sub-sectors like regional banks and asset management companies. Its largest positions include Triumph Financial (NYSE:TFIN) at 1.18%, Voya Financial (NYSE:VOYA) at 1.17%, and Apollo Global Management (NYSE:APO) at 1.14%. It has paid $1.48 per share over the trailing 12 months.
First Trust Nasdaq Bank ETF (NASDAQ:FTXO) launched in 2016 and is more concentrated with 42 holdings. The portfolio focuses entirely on financial services and emphasizes liquidity and volatility factors through its index methodology. Top holdings include Citigroup (NYSE:C) at 9.08%, Bank of America (NYSE:BAC) at 8.03%, and JPMorgan Chase (NYSE:JPM) at 7.64%. It has a trailing-12-month dividend of $0.68 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Banking stocks have had a turbulent few years, rattled by regional bank failures in 2023 before recovering as higher interest rates boosted lending profits. Both KBE and FTXO give you an opportunity to invest in this recovery, but they make very different bets on which banks will lead it.
KBE weights all its holdings equally, meaning a smaller regional lender gets the same representation as JPMorgan or Bank of America. That’s why you’ll see more unfamiliar names like Voya Financial in its holdings. That design gives investors broad exposure to the entire banking landscape, which means the fund doesn't live or die by the fortunes of a handful of institutions. You at least have some protection when any single bank runs into trouble.
FTXO instead uses a quantitative approach to pick its holdings, evaluating banks on specific financial metrics rather than simply tracking an index. And unsurprisingly, this process ends up favoring megabanks.
For long-term investors who value diversification and lower cost, KBE is the more practical foundation. FTXO is the better fit for those with conviction that America's largest banks will continue to lead.
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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. Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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