Today, First Trust launched a new exchange traded fund (ETF) targeting community banks, which received favorable attention in the wake of the credit crisis for having less exposure to toxic debt than their larger counterparts did.

The First Trust NASDAQ ABA Community Bank Fund (QABA) has an expense ratio is set at 0.60%.

The ETF is coming to market after much of the scandal concerning the large, institutional banks. Community banks were mostly left out of this mess, as their economic makeup differs greatly from the bigger picture. Even the regional banks are different than the community banks.

When well-run, community banks tend to be steady, low-risk performers, with limited upside but similarly limited volatility, Index Universe says. There are about 8,000 of these banks throughout the United States. They tend to be much more conservative and stay away from subprime lending and “exotic” financial instruments.

Ultimately, these smaller banks are evidence that there is a segment of the financial industry that is still alive and well. ABA’s community bank index follows the performance of the sector’s most actively traded stocks among the 482 community banks listed on the NASDAQ. The First Trust Advisors ETF will consist of 102 banks, reports Donna Mitchell for Financial Planning.

Tags: Community Banks, Financial, New ETFs, QABA, Sector ETFs