Invesco PowerShares, the IL-based global provider of mutual and exchange-traded funds with total assets exceeding $770 billion, has launched an international version of its wildly successful Buyback Achievers Portfolio (PKW).
PKW has nearly $3 billion in assets, making it one of the most successful broader market ETFs over the past few years and has comfortably outperformed the S&P 500 index during the current market advances.
The newly launched PoweShares International BuyBack Achievers Portfolio (IPKW) adds to the so-called line up of PowerShares’ 40 smart-beta funds. Smart-beta funds typically choose a broad-based index and screen it for qualitative and quantitative factors to boost returns.
IPKW will track the Nasdaq International Buyback Achievers Index, a float modified market capitalization weighted index composed of international companies that have bought back enough of their own shares to effect a net reduction of 5 percent or more of their outstanding stock over the past 12 months. Additionally, the constituents must have a minimum market capitalization $250 million and have a three month average daily traded volume of $1 million. The index is rebalanced quarterly in January, April, July and October.
The basic premise for constructing such an index is that companies that have bought back own shares should be holding cash reserves to execute buybacks. Periodic repurchase of shares is seen as returning capital since a reduced share count boosts future earnings per share while boosting future dividend payouts.
IPKW, however, is significantly different from its domestic predecessor in that it has only 41 holding versus 177 for PKW, which means less diversification and greater single stock risk. Also, each of the top ten holdings in IPKW are mid- and small-cap stocks while many of the constituents of PKW are large-cap household names like Oracle, Home Depot, AT&T and General Motors.
Japan gets the highest country exposure at 29.14 percent, followed by United Kingdom (20.91 percent) and Canada (8.73 percent). Other countries include Denmark, Switzerland, Australia, United States, Germany, South Africa and France. Financials (29.15 percent), consumer discretionary and consumer staples (14.62 percent) are the top three sector spots.
IPKW has an annual expense ratio of 0.55 percent.
Disclosure: No holdings