From 24/7 Wall St. · Ryne Mauck · · 2m
One Financial ETF Yields 15.70% and Lost Money
High-yield financial ETF lost money while two peers kept pace with S&P 500.
In brief
High-yield financial ETF lost money while two peers kept pace with S&P 500. The Invesco KBW High Dividend Yield Financial ETF (KBWD) returned -8% over the year despite a 15.7% distribution yield, while Vanguard Financials ETF (VFH) and State Street Financial Select Sector SPDR ETF (XLF) both returned ~15%. Originally…
High-Yield ETF Returns Negative
The Invesco KBW High Dividend Yield Financial ETF (KBWD) returned -8% over the year ended November 4, 2026, despite a 15.7% trailing twelve-month distribution yield.
Two Simpler Funds Matched S&P 500
Both the Vanguard Financials ETF (VFH) and State Street Financial Select Sector SPDR ETF (XLF) returned approximately 15% over the same period, matching the iShares Core S&P 500 ETF (IVV) at 14%.
KBWD's High Yield From Leveraged Lenders
KBWD holds 39 positions with $413 million in net assets, including mortgage REITs and business development companies (BDCs) like FS KKR Capital and Invesco Private Prime Fund.
Why These Businesses Pay So Much
Mortgage REITs and BDCs must pay out at least 90% of taxable income to maintain tax status, driving high distributions and leveraged business models.
Rates Explain Only Part of the Loss
Fed policy cuts and Treasury yield moves caused KBWD's monthly distribution to fall from $0.14795 in February 2026 to $0.13485 in October 2026.
XLF Leans on Berkshire and JPMorgan
XLF holds Berkshire Hathaway at 12% and JPMorgan Chase at 12%, with Visa at 8% and Mastercard at 5% in its portfolio.
VFH Reaches Deeper Financials
VFH covers midsize and smaller financials with a 0.09% expense ratio and 1.6% yield, while XLF focuses on large-cap financials.
Five-Year Performance Comparison
KBWD returned -8% over five years, while XLF and VFH returned 61% and 59% respectively, both trailing the S&P 500's 76% return.
What to Check Before Trusting Yield
Check total return, distribution trend, tax character, and underlying holdings to avoid high-yield traps.
Which Fund Fits Which Investor
XLF suits large-cap financial investors; VFH suits broader midsize/small financials; KBWD only suits monthly cash flow seekers.
The bottom line
The Invesco KBW High Dividend Yield Financial ETF (KBWD) returned -8% over the year despite a 15.7% distribution yield, while Vanguard Financials ETF (VFH) and State Street Financial Select Sector SPDR ETF (XLF) both returned ~15%.
