Invesco PowerShares Launches New Global Share Buyback ETF

December 22, 2014

Arnaud Llinas

Bryon Lake Head of Invesco
PowerShares
EMEA

Every once in a while, a new exchange traded fund comes along that captures a key emerging theme in the market: gold ETFs, dividend ETFs, low volatility ETFs and so on. The timing of the launch can give investors exposure to a new theme in the market just as it comes into vogue.

The new PowerShares Global Buyback Achievers UCITS ETF is one such fund.

Corporate stock buybacks—where companies buy back their own shares, reducing the total number of shares outstanding—have become a common theme in modern finance. They are an indicator that company management is on the side of shareholders, and represent one of the most tax efficient ways for profitable companies to return wealth to shareholders.

ETF Report UK recently caught up with Bryon Lake, Head of Invesco PowerShares - EMEA, to discuss the newly launched ETF and how it works.

ETF Report UK: Tell us about this new fund.
Bryon Lake: The PowerShares Global Buyback Achievers UCITS ETF is a new product that provides exposure to companies that are actively engaged in share buybacks. Specifically, it looks for companies that have reduced their overall share count by 5% or more in the trailing 12 months. The fund currently has an ongoing charge of 0.39% per annum and is available for trading on the LSE in either US$ (ticker: BUYB) or in GBP (ticker: SBUY).

ETF Report UK: Why are companies that are buying back shares potentially attractive?
Bryon Lake: Net share buybacks are a measurable quality factor. Companies that are repurchasing their own shares have a number of defining features: They’re profitable; their management is shareholder friendly; and they’re not afraid to return capital to the real owners of the company. Not surprisingly, when you have management align with shareholder interests, it tends to be a good thing.

You can also assume that, if management is buying back stock, it believes its shares are undervalued.

 

 

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