Invesco PowerShares, a leading global provider of exchange-traded funds, has announced the launch of the PowerShares Global Buyback Achievers UCITS ETF (BUYB).
Bryon Lake, Head of Invesco PowerShares, EMEA.
The ETF has been listed on the London Stock Exchange, with cross-listings on Borsa Italiana, Euronext Paris, Deutsche Börse and SIX Swiss Exchange planned for coming weeks.
The fund invests in companies that have bought back at least 5% of their own shares in the previous twelve months or most recent fiscal year and is the first such ETF linked to this type of strategy to be launched in Europe.
The underlying index is the Nasdaq Global Buyback Achievers Net Total Return Index, which is composed of securities from the Nasdaq US Buyback Achievers and the Nasdaq International BuyBack Achievers indices.
Initiating a buyback programme, one of two options for returning value to shareholders, often results in higher price/sales, price/earnings and price/cash flow ratios for the stock. A buyback programme can trigger higher share prices and as a consequence increase the stock’s performance. In 2013, S&P 500 constituent companies spent $475.6 billion on buybacks, up from $398.9 billion in 2012.
In 2006, Invesco PowerShares partnered with Nasdaq Global Indexes to develop a buyback index: the Nasdaq US Buyback Achievers Index. Currently, Invesco PowerShares manages $2.9 billion globally in ETFs tracking buyback strategies.
Bryon Lake, Head of Invesco PowerShares, EMEA, stated: “This new product offers an innovative yet simple factor-based way to invest in global equities. Through the underlying index, the PowerShares Global Buyback Achievers UCITS ETF provides access to a “smart beta” approach to investing in companies that return value by buying back shares. Buybacks can be more tax efficient than dividends, and this new ETF offers a low-cost, transparent and liquid vehicle through which to access this strategy.”
Invesco PowerShares, the fourth largest ETF provider globally, was the first-to-market with smart beta ETFs. Since 2003 in the US and 2007 in Europe, Invesco PowerShares has offered a selection of ETFs that track “next generation” indices, giving an effective alternative to traditional market capitalisation weighted indexing, with products that aim to outperform through intelligent security selection and weighting.
The fund has a total expense ratio of 0.39%.