Related: A Factor to Embrace in 2019
While QSY can be an alternative to traditional value funds, the ETF has a growth feel as the consumer discretionary and technology sectors combine for over 40% of its weight. The financial services and industrial sectors combine for over 35%.
Another knock on buybacks is that companies that deploy capital in that fashion may not be reinvesting enough in their businesses, but that argument is not universally true.
“Well-run companies may allocate a percentage of their excess capital across internal investments, share repurchases, dividends, debt reduction, M&A and other opportunities, based on their strategic priorities and expected rates of return,” said WisdomTree. “Managements typically want to deploy capital first toward the priority with the highest return on investment.”
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