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Invesco PowerShares launches Europe’s first buyback ETF

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Invesco PowerShares has launched the European PowerShares Global Buyback Achievers UCITS ETF on the London Stock Exchange, with further listings across selected European countries in progress.

The new ETF invests in companies that have bought back at least five per cent of their own shares in the previous twelve months, reducing the number of shares outstanding.
 
The PowerShares Global Buyback Achievers UCITS ETF is the first and only ETF which will be available in Europe.
 
The ETF tracks via full physical replication the NASDAQ Global Buyback Achievers Net Total Return Index, which is comprised of securities from the NASDAQ US Buyback Achievers Index (comprised of corporations that have effected a net reduction in shares outstanding of five per cent or more in the trailing twelve months) and the NASDAQ International BuyBack Achievers Index (comprised of corporations that have effected a net reduction in shares outstanding of five per cent or more in its latest fiscal year). 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 USD475.6 billion on buybacks, up from USD398.9 billion in 2012. 
 
In 2006, Invesco PowerShares partnered with Nasdaq Global Indexes to develop the Nasdaq US Buyback Achievers Index. Currently, Invesco PowerShares manages USD2.9 billion globally in ETFs tracking buyback strategies.
 
Bryon Lake, head of Invesco PowerShares – EMEA, says: “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.”

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