The ETF landscape is ever changing, and has grown massively since the ETF rule arrived in 2019. It was the game-changer that streamlined the launch process for new funds, thus allowing asset managers to offer new and innovative strategies in the wrapper. ProShares is the latest firm to add to the ETF ecosystem, building on its existing suite of strategies offering income, dividends, and options-based strategies. The newly launched BUYB, is a unique fund that targets firms frequently engaging in stock buybacks.
Key Takeaways:
- ProShares has added to the growing ETF ecosystem with their latest launch.
- A unique fund, the firm claims it is the only ETF targeting companies engaged in “persistent” stock buybacks.
- It offers a targeted exposure to a smaller slice of outperformers, with just over 10% of S&P 500 names eligible for inclusion.
The ProShares S&P 500 Buyback Aristocrats ETF targets companies “with a persistent record of buying back their stock.” According to a recent ProShares press release, BUYB is the only ETF currently offering this specific strategy.
“BUYB provides a differentiated way to access high-quality companies with a sustained commitment to share buybacks,” said ProShares CEO Michael L. Sapir per the release. “Ten consecutive years of share buybacks is an exceptional achievement that reflects disciplined capital management, strong fundamentals, and a shareholder-focused approach.”
BUYB will track the S&P 500 Buyback Aristocrats Index for a 39 basis point fee. To be eligible for the index, firms must have consistently reduced their shares outstanding through buybacks for ten consecutive years.
Furthermore, the press release also pointed to the historical outperformance of firms that frequently engage in share buybacks. While these firms span multiple sectors, they remain a select group, representing only about 13% of the S&P 500.
The fund, then, could prove an intriguing option to target firms within a smaller slice of that key index. Many investors are already heavily exposed to the S&P 500 overall. By using the ETF wrapper and its tax efficiency and easy tradability, ProShares offers a precise strategy to find the standouts within that key index.
See more: How Dividend Growth Tech ETF TDV Avoids Concentration Risk While Outperforming
Given its focus on high-quality firms, BUYB serves as a compelling satellite offering for investors looking to complement their core S&P 500 exposure. ProShares manages more than $100 billion in assets, leading in dividend growth, income, and other popular ETF subcategories.
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