The PowerShares Buyback Achievers Portfolio (NYSEArca: PKW) finds itself in a familiar place: Flirting with another all-time high. Despite finishing modestly lower Monday, PKW is less than 0.4% below its all-time high.
PKW, which has established a cult-like following in recent years, is up just under 8% this year. That lags the S&P 500, though as has been previously noted, that is unfamiliar territory for the ETF. PKW has outperformed the benchmark U.S. index in five of the past six years and by wide margins on most occasions. [Buyback ETF Still Shines]
PKW has dealt with some headwinds this year, including its 34.4% weight to the consumer discretionary, which has been a laggard within the S&P 500. PKW’s weight to discretionary stocks is more than double its next largest sector allocation, 16.5% to technology, but there is good news on the discretionary front.
The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up almost 4% in the past month and is also flirting with fresh all-time highs. XLY has also been one of the top asset-gathering sector ETFs since the start of the current quarter.
PKW has also endured large share repurchasers under-performing the broader market earlier in the year, data that say buybacks are slowing and some market observers saying the impact of buybacks will be muted going forward. Jonathan Glionna, head U.S. equity strategist at Barclays, told Bloomberg last week the future outperformance of buybacks will be “less robust” because buybacks are not an elixir for slowing growth.
Still, PKW’s ability to outperform broader benchmarks over longer time horizons should not be underestimated. As it has previously shown, the ETF does not need the largest U.S. share repurchasers to drive it higher. In fact, PKW has outperformed the S&P 500 by over 1,800 basis points over the past three years without holding Apple (NasdaqGS: AAPL), Exxon Mobil (NYSE: XOM) or International Business Machines (NYSE: IBM), three of the largest S&P 500 share repurchasers over that time. [IBM Isn’t a Factor in Buyback ETFs]