Invesco PowerShares has launched an exchange-traded fund (ETF) that invests in companies which have bought back at least 5% of their own shares in the past year.
Listed on the London Stock Exchange and Euronext Paris, European PowerShares Global Buyback Achievers Ucits ETF is said to be the first of its kind.
Buying back shares reduces the number of shares outstanding and can return value to shareholders.
The ETF uses full physical replication to track the Nasdaq Global Buyback Achievers Net Total Return Index, an index comprised of securities from both the US and international Nasdaq Buyback Achievers Indices. All corporations included in the index have achieved a net reduction in shares outstanding of 5% or more in the past year.
Bryon Lake, head of Invesco PowerShares for Europe, the Middle East and Africa, says: “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.”
The ETF will also be listed on the Borsa Italiana and Deutsche Börse XETRA exchanges during November, and on the SIX Swiss exchange in December, subject to regulatory approval.
Invesco PowerShares, part of global investment management company Invesco, is the fourth largest ETF provider globally and currently manages $2.9 billion (€2.3 billion) in ETFs tracking buyback strategies.
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