Key Points

Invesco KBW Bank ETF carries a lower expense ratio and higher assets under management (AUM) compared to First Trust Nasdaq Bank ETF
First Trust Nasdaq Bank ETF manages a larger portfolio of 42 holdings but has seen lower 1-year total returns than Invesco KBW Bank ETF
Invesco KBW Bank ETF provides a slightly higher trailing-12-month dividend yield while maintaining a more concentrated basket of 26 securities

The Invesco KBW Bank ETF delivers an economical way to invest in banking with stronger recent performance, whereas the First Trust Nasdaq Bank ETF emphasizes wider diversification.

Both funds target the domestic banking sector but follow different indexing methodologies to capture the industry performance. While the Invesco KBW Bank ETF tracks a market-cap-weighted index of money centers and regional banks, the First Trust Nasdaq Bank ETF uses a smart indexing approach focused on liquidity and fundamental factors such as volatility and growth.

Snapshot (cost and size)

Metric	FTXO	KBWB
Issuer	First Trust	Invesco
Expense ratio	0.6%	0.35%
1-yr return (as of June 8, 2026)	26.2%	36.0%
Dividend yield	1.8%	2.0%
Beta	0.89	1.02
AUM	$290.8 million	$5.6 billion

Beta measures price volatility relative to the S and 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 Invesco fund is more affordable, charging an expense ratio of 0.35% compared to the 0.6% for the First Trust fund. Additionally, the Invesco fund offers a higher payout for income-seeking investors through its distribution yield.

Performance and risk comparison

Metric	FTXO	KBWB
Max drawdown (5 yr)	(46.6%)	(49.3%)
Growth of $1,000 over 5 years (total return)	$1,367	$1,523

What is inside

Invesco KBW Bank ETF (KBWB) focuses entirely on the financial services sector, with 26 holdings representing 100% of the portfolio. Launched in 2011, it weights its positions using a modified market-cap approach to track national money center banks and thrifts. Its largest positions include Morgan Stanley at 9.28%, The Goldman Sachs Group at 8.85%, and Bank of America at 7.84%. Over the trailing 12 months, the Invesco fund has paid $1.80 per share in dividends.

First Trust Nasdaq Bank ETF (FTXO) also maintains 100% exposure to financial services but uses a broader selection of 42 holdings. Launched in 2016, its top holdings include Citigroup at 9.04%, Bank of America at 8.05%, and JPMorgan Chase and Co. at 7.75%. This fund has a trailing-12-month dividend of $0.68 per share. Both ETFs prioritize U.S.-listed institutions, but FTXO includes more regional players and mid-sized banks than its larger competitor, which tends to lean toward the industry heavyweights.

Which looks like the better buy

The Invesco KBW Bank ETF (KBWB) and the First Trust Nasdaq Bank ETF (FTXO) are both exchange-traded funds focused on the banking sector. However, they differ in some key respects. Here is what investors need to know about each of them.

First, let us start with KBWB. This fund, started in 2011, is focused on national money centers, leading regional banks, and thrifts. Granted, its top holdings include Goldman Sachs, Morgan Stanley, and Bank of America - giant, global banking brands; however, these mega-caps comprise only about a third of the fund holdings. The rest is dedicated to smaller companies. Overall, the fund offers exposure at a reasonable cost. The fund charges an expense ratio of 0.35%. Finally, the fund 2.0% dividend yield is solid.

Then, there is FTXO. This fund is slightly more diversified than KBWB, with 42 holdings rather than KBWB 26. It also has a greater share of regional banks. As for performance, FTXO has generated a total return of 148% since 2017, with a compound annual growth rate (CAGR) of 9.8%. KBWB, by contrast, has generated a total return of 215%, with a CAGR of 12.6%. Both funds have underperformed the S and P 500, which has generated a total return of 309%, with a CAGR of 15.7%.

In summary, for investors seeking exposure to the U.S. banking sector, KBWB may be of interest due to its lower fees, higher dividend yield, and better long-term performance. However, some investors may still favor FTXO due to its greater diversification.