Invesco PowerShares Launches New Global Share Buyback ETF

December 22, 2014

 

ETF Report UK: Why do companies buy back shares rather than pay dividends?
Bryon Lake: Ultimately, it’s a very efficient way to increase shareholders’ wealth. By reducing the supply of shares available in the market, you increase the value of each outstanding share and drive up the future earnings per share ratio. It can be more tax efficient than a dividend strategy, and ultimately, more effective at increasing shareholder wealth.

ETF Report UK: Couldn’t management just invest that money back into the business, rather than returning it to shareholders through buybacks?
Bryon Lake: Of course. And they do. If management identifies a place where they can invest capital and achieve a good return, you can be sure they’ll do it.

But the challenge is to do something with cash when it’s sitting on your books.

It’s often a sign of true stewardship and a focus on shareholder wealth when they choose to return that capital to shareholders by buying back stock instead.

ETF Report UK: Who else offers a share buyback ETF in Europe?
Bryon Lake: We are currently the only issuer to provide this specific strategy through an ETF vehicle in Europe.

ETF Report UK: What is Invesco PowerShares’ expertise in this space?
Bryon Lake: In 2006, Invesco PowerShares partnered with Nasdaq Global Indexes to develop a pioneering buyback index. Currently, Invesco PowerShares manages $2.9 billion globally in ETFs tracking buyback strategies.

 

 

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