Here is the Best Bank ETF
Key Points
Invesco KBW Bank ETF focuses on 26 large money center banks while State Street SPDR S&P Bank ETF tracks a broader field of 103 institutions.
Both banking funds carry an identical expense ratio of 0.35%.
Invesco KBW Bank ETF has delivered a higher 1-year total return but shows greater historical volatility with a deeper max drawdown.
- 10 stocks we like better than Invesco Exchange-Traded Fund Trust II - Invesco Kbw Bank ETF ›
The Invesco KBW Bank ETF (NASDAQ:KBWB) targets a concentrated selection of large-cap money center institutions, whereas the State Street SPDR S&P Bank ETF (NYSEMKT:KBE) employs an equal-weighted strategy across a broader range of 103 banking stocks.
Investors often turn to the banking sector to express a view on interest rate cycles and the broader health of the U.S. economy. While both funds provide pure-play access to financial services, their construction methods lead to different risk profiles. This comparison looks at how the concentrated cap-weighted approach of one fund differs from the diversified equal-weighted model of the other.
Snapshot (cost & size)
| Metric | KBE | KBWB |
|---|---|---|
| Issuer | SPDR | Invesco |
| Share price | $68.22 (as of 2026-06-30) | $92.98 (as of 2026-06-30) |
| Expense ratio | 0.35% | 0.35% |
| 1-yr return (as of 2026-06-30) | 25.30% | 32.80% |
| Dividend yield | 2.10% | 2.00% |
| Beta | 0.89 | 1.01 |
| AUM | $1.5 billion | $6.5 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.
Both funds offer an identical expense ratio of 0.35%, making them equally cost-effective choices for sector exposure. In terms of income, the payout gap is minimal, with the State Street fund providing a slightly higher trailing yield of 2.10% compared to 2.00% for the Invesco fund.
Performance & risk comparison
| Metric | KBE | KBWB |
|---|---|---|
| Max drawdown (5 yr) | (45.20%) | (49.30%) |
| Growth of $1,000 over 5 years (total return) | $1,510 | $1,646 |
What's inside
The Invesco KBW Bank ETF focuses on 26 of the largest banking institutions in the country. Its portfolio is 100% concentrated in financial services, utilizing a market-cap weighting methodology that favors national money center banks and major regional establishments. Its largest positions include Bank of America Corp (NYSE:BAC) at 8.25%, JPMorgan Chase & Co (NYSE:JPM) at 8.17%, and Wells Fargo & Co (NYSE:WFC) at 7.96%. The fund was launched in 2011. It has paid $1.86 per share over the trailing 12 months, which on its recent ~$92.98 share price works out to a 2.00% yield.
The State Street SPDR S&P Bank ETF tracks the S&P Banks Select Industry Index, spreading exposure across 103 holdings. Unlike its cap-weighted peer, this fund uses a modified equal-weighted approach, which provides greater influence to mid- and small-cap regional banks. The portfolio is 100% concentrated in financial services, and its top holdings include Rocket Cos Inc (NYSE:RKT) at 1.15%, Nicolet Bankshares Inc (NYSE:NIC) at 1.05%, and The Bancorp Inc (NASDAQ:TBBK) at 1.05%. The fund was launched in 2005. It has paid $1.47 per share over the trailing 12 months, which on its recent ~$68.22 share price works out to a 2.10% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
These are two of the leading ETFs that focus on bank stocks. But there are key differences between the two. KBWB invests in an index that only includes large banks, with roughly 26 names in the portfolio. KBE is much broader, tracking banks of various cap sizes with some 103 holdings.
The performance of the two over the years is pretty similar. KBE, up 14%, has a higher return year-to-date, but KBWB has been better over the past year, up around 30%. KBWB also holds the return advantage over the past five and 10 year periods — up 11% and 14%, respectively. KBE is up 9% and 11% on an annualized basis over the past five and 10 years, respectively. These numbers are on a total return basis.
KBE has a slightly higher distribution yield at 2.12% to 1.97% for KBWB.
Which one you prefer depends on what you are looking for. The KBE ETF tends to perform better in down markets, offering more portfolio balance and downside protection. It also has a slightly higher dividend payout and the returns are very similar. Investors in bank stocks may not necessarily be looking for alpha, but may want diversification and portfolio balance. Plus, KBE is equal-weighted and not cap-weighted, providing even more diversification. For these reasons I would probably favor KBE.
Should you buy stock in Invesco Exchange-Traded Fund Trust II - Invesco Kbw Bank ETF right now?
Before you buy stock in Invesco Exchange-Traded Fund Trust II - Invesco Kbw Bank ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco Exchange-Traded Fund Trust II - Invesco Kbw Bank ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $418,761!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,195,804!*
Now, it’s worth noting Stock Advisor’s total average return is 918% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 3, 2026.
Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, Nicolet Bankshares, and Rocket Companies. The Motley Fool has a disclosure policy.
Recommended Articles
