“Despite the above disadvantages of share buybacks, even with the market at its all-time high, the PKW ETF has a positive bias to prospering companies, with ample cash flow and promising prospects that are believed (by their management) to result in a higher stock price in the future. To be sure, the outstanding performance of the ETF vs. the S&P since its inception is the most solid evidence,” notes Aristofanis Papadatos in a post on Seeking Alpha.
Adding to PKW’s allure is that the ETF has the look of a value play. That despite frequent (and warranted) criticism that companies that are voracious buyers of their own shares rarely commit to buybacks when value is clearly obvious.
In addition to the hefty weight to discretionary names and the aforementioned 16.5% weight to technology stocks, PKW allocates 16.6% of its combined weight to financial services and energy names, two sectors that currently trade at attractive valuations relative to the broader U.S. market. Along those lines, the ETF is lightly allocated to richly valued defensive sectors such as consumer staples and utilities. [Buybacks Slow, but Buyback ETF Still Firm]
PowerShares Buyback Achievers Portfolio
