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Apple and IBM are now holdings of PKW. 5% of shares outstanding was the key cutoff line. These two tech heavyweights represent more than 10% of the ETF. Additions should make this growing ETF more popular. When investors look at exchange-traded funds, there are a number of choices out there. You can buy an index ETF like the SPDR S&P 500 (NYSEARCA: SPY ), a sector ETF like the Energy Select Sector SPDR (NYSEARCA: XLE ), or even a country fund like the iShares MSCI Germany (NYSEARCA: EWG ). There are certainly ETFs for everyone, and there are even many specialty ones. One of my favorite ETFs is the PowerShares Buyback Achievers Portfolio ETF (NYSEARCA: PKW ), an exchange-traded fund that buys stock in companies that are buying back stock, and lots of it. I’ve written about this ETF a couple of times, and today I’m here to write about it again. My first article on PKW was in regards to a major shakeup that could come involving technology giant Apple (NASDAQ: AAPL ). As many investors know, Apple has an extremely large share repurchase plan in place. Well, PKW has just done its annual reconstitution, and Apple and tech giant IBM (NYSE: IBM ) are now holdings in this ETF. Today, I’ll look at what that means for both stocks, as well as PKW. For those that have not heard of this ETF, please see the above-linked article for the complete description. The main idea is to include companies that have bought back at least 5% of their outstanding shares over the past twelve months. The fund is reconstituted every January and rebalanced four times a year. Apple recently announced a tremendous quarter highlighted by nearly 75 million iPhone sales. The strength of the phone and other products has allowed Apple to spend more than $70 billion on its buyback in the past couple of years. Last year, Apple missed out on inclusion in this ETF, but in the past twelve months, the share count has come down by more than 6%. IBM has also been buying back a tremendous amount of shares, and it is the third-largest holding in the fund. In the table below, you can see the other top ten holdings, which include Home Depot (NYSE: HD ), Boeing (NYSE: BA ), Twenty-First Century Fox (NASDAQ: FOXA ), Lowe’s (NYSE: LOW ), Time Warner (NYSE: TWX ), Express Scripts (NASDAQ: ESRX ), Monsanto (NYSE: MON ), and FedEx (NYSE: FDX ). That’s an impressive list of companies, including a couple of Dow components. (See all holdings here ) The total value of the ETF is a little over $2.7 billion, meaning Apple represents about $145 million. That doesn’t sound like much when thinking about Carl Icahn’s couple of billion worth of Apple’s shares or the market cap of nearly $700 billion. However, to the average investor, it is still a lot of money. Another ETF buying up a chunk of Apple makes less shares available to the public, which Apple’s buyback is also helping with. Adding Apple and IBM to the ETF should help PKW become more popular. On the face of it, a buyback ETF seems like a great idea. When stocks are rising, those that are buying back shares should do even better. When stocks are falling, buybacks should ease the fall. Companies are spending a ton of money on buybacks currently . In the chart below, you can see how PKW has significantly outperformed SPY over the past five years. (click to enlarge) (Source: Yahoo! Finance) The ETF market just got a bit more interesting, as Apple and IBM have been added to the PowerShares Buyback Achievers Portfolio ETF. These names may only stay in the ETF for a year, but they certainly will attract attention to PKW. This has been one of my favorite ETFs over the past couple of years, and its performance has been rather spectacular. For those looking for some exposure to Apple or IBM without gambling on them individually or the tech sector as a whole, perhaps you should take a look at this name. Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. Additional disclosure: Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation. Scalper1 News
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