Community Bank ETF Launches: Fewer Problems, Bigger Profits

The only exchange traded fund to focus on community banks started trading yesterday on the NASDAQ. The First Trust Nasdaq ABA Community Bank Fund (QABA) from First Trust Advisors focuses on banks with a local focus, using a strict index criteria to exclude larger regional banks and banks that otherwise derive revenue from outside their home markets (e.g. credit card servicing).

The fund may appeal to investors looking to profit from the problems at larger banks, as smaller players are in a position to lend and gain market share. The index is down 25% so far this year, beating the 35% ytd decline of the SPDR KBW Regional Banking Fund (KBE). First Trust specializes in such niche products, and is the 14th largest issuer of ETFS in the US.