First Trust NASDAQ ABA Community Bank Index Fund

QABA

Market cap $92.7M

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.

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