“Companies are feeling some pressure not to just spend their savings on buybacks,” Joseph Amato, president and chief investment officer for equities at Neuberger Berman Group LLC, told the WSJ. “But at a time when we’re already seeing double-digit earnings growth around the world, they can’t hurt.”
Consequently, as more companies look to add value through share repurchases, ETF investors can also capitalize on the potential opportunity through buyback-centric ETF strategies.
For instance, ETF investors who believe in a rise in share repurchases can look to ETFs that specifically target companies that implement buyback schemes, including the PowerShares Buyback Achievers Portfolio (NYSEArca: PKW), the SPDR S&P 500 Buyback ETF (NYSEArca: SPYB) and more recently launched iShares U.S. Dividend and Buyback ETF (Cboe: DIVB).
PKW includes a broader selection of U.S. companies that have effected a net reduction in shares outstanding by 5% or more in the trailing 12 months. SPYB focuses on S&P 500 companies with the highest buyback ratio in the past 12 months. Lastly, DIVB is comprised of U.S. stocks with a history of dividend payments and or share buybacks where holdings include those with the largest dividend and buyback programs in the market measured by dollar value,
For more information on the buybacks strategy, visit our buybacks category.