First Trust NASDAQ ABA Community Bank Index Fund

QABA

Valor de mercado US$ 84,2 mi

Deposit costs are squeezing margins at US banks, and there is no near-term relief in sight, even as certificate of deposit (CD) repricing waves lock in higher funding costs well into 2027. As of June 26, 639 banks marketed rates above 3.5% on a one-year $10,000 CD, down from 1,006 a year ago but up from 583 since the end of the first quarter.

Tech capex and geopolitics have dominated the headlines this year, but opportunities emerge elsewhere. Dividend growth investing could be hitting its stride amid shifting macro and micro trends. Novel, forward-looking strategies may help asset allocators find alpha beyond traditional income approaches.

IAT: Undervalued Regional Banks With Strong Growth Momentum

US banks' net interest margins are poised to expand, but higher-for-longer interest rates and uncertainty created by tariffs will push credit costs higher and limit earnings growth in 2025. Banks' earnings should remain healthy through the first half of the year, buoyed by continued margin expansion, steady loan growth and benign credit quality.

QABA offers exposure to small community banks with attractive valuations, higher yields, and potential acquisition upside versus larger peers. Despite some compelling individual bank stories, QABA's historical returns have been erratic, and the fund has lagged broader benchmarks recently. The ETF carries higher risks due to its sensitivity to interest rates and concentrated exposure to smaller banks, which may be depending heavily on commercial real estate.

First Trust NASDAQ® ABA Community Bank Index Fund ETF holds 154 small and micro-cap banks and thrifts. The QABA ETF is well-diversified in states and holdings, and shows growth characteristics within the banking industry. QABA has a lackluster track record, lagging the banking industry benchmark and the small-cap benchmark.

After reaching a record high, all three bourses lost momentum on sticky inflation and the Fed's hawkish comments.

July witnessed the "Great Rotation" in the U.S. stock market as investors shunned the hot technology stocks in favor of smaller companies and other sectors, which are the bigger beneficiaries of the Fed rate cuts.

Wall Street offered a mixed performance last week.

Wall Street was mixed last week with the S&P 500, the Dow Jones and the Nasdaq losing 1.9%, adding 0.7% and retreating 3.7% last week. The small-cap index Russell 2000 advanced 1.7% last week as “Trump Trade” gained momentum.