Buybacks Make Sense

More room to run:

Current market enthusiasm in Buybacks is drawing the attention of analysts and assets from investors. Looking back over the past 17 years, buyback strategies performed well versus the broader market and offered good downside protection through market corrections.

Buyback Strategies vs. Broader Market1

Why Buybacks?

Share repurchases represent an effective method of returning excess capital to shareholders. Focusing solely on high dividend paying companies overlooks a large opportunity set.

Buybacks are the most tax-efficient form of corporate payout, as they result in capital gains as opposed to more heavily taxed dividend income.

Why now?

Recent tax reform in the U.S. is providing higher savings for U.S. corporations that can be used in share buyback programs. Year-to-date, there has been a record volume of U.S. buyback announcements.

Favorable valuations: In the U.S., high buyback yielding companies are currently trading at attractive P/E discounts versus the S&P 500.

Interesting way to participate in further market upside with potential downside cushion.

First Asset offers the only buyback-focused ETFs in Canada:

More About FBE More About FBU
  1 Year 3 Year 5 Year 10 Year Common Start
(Jun 22, 2000)
CIBC Canadian Buyback Index 17.33% 8.62% 11.27% 8.57% 10.71%
S&P/TSX Composite TR Index 11.74% 7.48% 8.81% 4.99% 5.36%
CIBC U.S. Buyback Index 22.37% 13.14% 14.99% 15.42% 13.35%
S&P 500 TR Index (CAD Hedged) 16.24% 12.52% 13.12% 10.67% 5.77%
Source: Morningstar as at July 31, 2018.


1. The rate of return chart shown is used only to illustrate the effects of the compound growth rate of the Index and is not intended to reflect future values of the Index or the Fund or returns on investment in the Fund. Returns of an Index do not represent a Fund's returns. An investor cannot invest directly in an Index. All performance data for all indices assumes the reinvestment of all distributions. CIBC index performance data results prior to September 8, 2016 are hypothetical, but are calculated using the same methodology that has been in use by the index provider since the Index was first published. Information regarding the CIBC index, including the applicable index methodology, is available at https://www.solactive.com/?s=CIBC. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual Index performance.

Use of benchmarks: The S&P/TSX Composite Index is a capitalization-weighted index designed to measure market activity of stocks listed on the Toronto Stock Exchange. This index is used as a benchmark to help you understand the CIBC Canadian Buyback Index's performance relative to the general performance of broader Canadian equity market. The S&P 500 Index tracks 500 large-cap U.S. stocks representing all major industries. This index is used as a benchmark to help you understand the CIBC U.S. Buyback Index's performance relative to the general performance of the broader U.S. equity market.

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The opinions contained in this communication are solely those of the First Asset at the indicated date of the information and are subject to change without notice. This communication may contain forward looking statements which are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Other events which were not taken into account may occur and may significantly affect the returns or performance of the Fund. First Asset does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law. First Asset assume no responsibility for any losses or damages, whether direct or indirect, which arise from the use of this information and expressly disclaims liability for any errors or omissions in this information.

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Index Provider: CIBC Capital Markets

Brandmark for CIBC Capital Markets

CIBC Capital Markets is a leading provider of quantitative index strategies across multiple asset classes including equities, commodities, FX and rates to retail investors, asset managers, pension plans and insurance companies in North America. Our index family provides factor, trend, curve, hedging and thematic based investing while facilitating exposure to various asset classes in a systematic, transparent and cost-efficient manner. CIBC was the first commodity index provider in Canada and has been named the Canada Derivatives House of the Year by GlobalCapital for four consecutive years (The GlobalCapital Americas Derivatives Awards (2014 - 2017)).