Fidelity's FNCL or State Street's KBE: Which Financial ETF Is the Better Long-Term Buy?
Key Points
Fidelity MSCI Financials Index ETF offers a lower expense ratio of 0.08% compared to the 0.35% charged by State Street SPDR S&P Bank ETF.
State Street SPDR S&P Bank ETF provides targeted exposure to the banking industry, while Fidelity MSCI Financials Index ETF holds a broader portfolio of financial services companies.
Fidelity MSCI Financials Index ETF has shown a lower maximum drawdown over the last five years, compared to the banking-focused State Street SPDR S&P Bank ETF.
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Fidelity MSCI Financials Index ETF (NYSEMKT:FNCL) provides broad financial sector exposure and a lower cost, while State Street SPDR S&P Bank ETF (NYSEMKT:KBE) offers concentrated banking access with a higher yield.
Investors looking for financial sector exposure may choose between broad-market coverage and a niche banking focus. While both funds hold major financial institutions, their index strategies differ in diversification, cost, and historical volatility profiles, impacting how they may fit into a long-term portfolio.
Snapshot (cost & size)
| Metric | KBE | FNCL |
|---|---|---|
| Issuer | SPDR | Fidelity |
| Share price | $71.41 (as of 2026-08-13) | $83.07 (as of 2026-08-13) |
| Expense ratio | 0.35% | 0.08% |
| 1-yr return (as of 2026-08-13) | 24.2% | 12.5% |
| Dividend yield | 2.0% | 1.5% |
| Beta | 0.89 | 0.89 |
| AUM | $1.8B | $2.4B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). 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 0.08%, the Fidelity MSCI Financials Index ETF is more affordable than the State Street SPDR S&P Bank ETF, which charges 0.35%. The State Street SPDR S&P Bank ETF currently offers a higher payout with a 2% yield compared to 1.5% for the Fidelity MSCI Financials Index ETF.
Performance & risk comparison
| Metric | KBE | FNCL |
|---|---|---|
| Max drawdown (5 yr) | (45.2%) | (25.7%) |
| Growth of $1,000 over 5 years (total return) | $1,567 | $1,663 |
What's inside
Fidelity MSCI Financials Index ETF tracks a broad index covering roughly 97% financial services, 2% technology, and 1% real estate. Its largest positions include JPMorgan Chase & Co (NYSE:JPM) at 10.50%, Berkshire Hathaway (NYSE:BRKB) at 7.60%, and Visa (NYSE:V) at 6.63%. The fund holds 404 securities and was launched in 2013. Fidelity MSCI Financials Index ETF has paid $1.26 per share over the trailing 12 months, which on its recent ~$83.07 share price works out to a 1.5% yield.
State Street SPDR S&P Bank ETF provides focused exposure to the banking industry within the financial services sector. Its largest positions include The Bancorp (NASDAQ:TBBK) at 1.14%, Corebridge Financial (NYSE:CRBG) at 1.12%, and Equitable Holdings (NYSE:EQH) at 1.11%. The fund tracks a modified equal-weighted index of 103 holdings and was launched in 2005. State Street SPDR S&P Bank ETF has paid $1.47 per share over the trailing 12 months, which on its recent ~$71.41 share price works out to a 2% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
The U.S. financial sector has delivered some of its strongest returns in years, but not every corner of it has moved at the same pace. America's biggest banks have surged as merger activity picked up, financial markets boomed, and investors bet that a friendlier regulatory environment would follow. That concentrated banking strength is exactly what KBE has captured. Its equal-weighted structure gives every bank in the portfolio the same influence, and the past year's returns reflect how broadly that banking rally has run.
FNCL covers the whole financial sector, including banks alongside payment networks, insurers, and asset managers. That diversification has diluted the impact of banking's strong run but also provided exposure to parts of the sector that have thrived on different drivers.
The fee difference between these two is striking, with KBE charging more than four times what FNCL does. But that premium has been worth paying over the past year, given KBE's strong performance. For investors who believe the banking rally still has room to run, KBE's concentrated exposure and higher yield make it the better buy. For those who want lower-cost, diversified financial sector exposure not entirely dependent on banking strength, FNCL is the more practical long-term foundation.
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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 Berkshire Hathaway, JPMorgan Chase, and Visa. The Motley Fool has a disclosure policy.
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