An ETF that specializes in share buybacks is sitting on a gain of nearly 30% for the year. Investors are taking notice as the fund has pulled in fresh assets of almost $1 billion so far in 2013.
PowerShares Buyback Achievers (NYSEArca: PKW) has delivered a total return of 28.2% year to date, while SPDR S&P 500 ETF (NYSEArca: SPY) is up 17.7%.
PKW’s long-term returns also trounce the S&P 500.
“The fund drew $273 million last month and nearly $1 billion year to date. Assets are now $1.3 billion,” notes Morningstar analyst Michael Rawson. “The fund, which focuses on stocks of companies that have bought back shares, has returned a phenomenal 28.7% over the past year and 12.2% annualized over the past five years, compared with 18.7% and 7.3% for the S&P 500.”
Other ETFs that incorporate share buybacks into their strategies include AdvisorShares TrimTabs Float Shrink ETF (NYSEArca: TTFS) and Guggenheim Insider Sentiment (NYSEArca: NFO). [Buyback ETF Beats the Market]
PKW is the largest of the three ETFs. It tracks the Buyback Achievers Index. To become eligible for inclusion in the index, a company must have repurchased at least 5% or more of its outstanding shares in the past year.
Dividend ETFs have been extremely popular in recent years with investors seeking income in a low-rate environment. However, companies electing to return capital to investors via share buybacks have been strong performers, as the returns of the buyback ETFs demonstrate. [Forget Dividend ETFs, ‘Float-Shrink’ Buyback Fund Trouncing Market]
PowerShares Buyback Achievers
Full disclosure: Tom Lydon’s clients own SPY.