Buyback ETF Thrashing the Market Up Nearly $1 Billion in 2013
September 6th 2013 at 10:23am by John Spence
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.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.