KBW went on to note that “Relative to other regions in the U.S., we believe that, as a group, larger community banks in metropolitan California are better positioned to deliver attractive growth and profitability for investors.”
The research firm’s top ideas among California banks include SVB Financial (NasdaqGS: SIVB), PacWest Bancorp (NasdaqGS: PACW), Cathay General (NasdaqGS: CATY), CVB Financial (NasdaqGS: CVBF), East West Bancorp (NasdaqGS: EWBC) and First Republic (NYSE: FRC) with the top idea being Los Angeles-based PacWest Bancorp. [The Right ETF for California Banks]
California banks that KBW spoke favorably of combine for almost 12% of QABA’s weight with SVB Financial and East West Bancorp ranking as the ETF’s third- and fourth-largest holdings, respectively, combing for 7% of the fund’s weight.
QABA’s three-standard deviation and beta are slightly below that of the S&P Composite 1500 Financials Index and banks “must meet certain operating history, solvency, and financial statement requirements to remain eligible for inclusion in the index,” according to First Trust.
First Trust NASDAQ ABA Community Bank Index Fund