NEW YORK (TheStreet) -- U.S. companies aren't the only ones spending billions of dollars on share buybacks. Many foreign companies are doing it as well.
Investors can take advantage of this trend through ETFs that track companies with significant share buybacks, which are intended to boost the stock's price by reducing the number of shares in circulation.
In the U.S., there's the popular PowerShares Buyback Achievers Portfolio (PKW). For an international play, there's the lesser-known PowerShares International Buyback Achievers Portfolio (IPKW).
The PowerShares International BuyBack Achievers Portfolio is up 15.3% this year, a performance that is nearly 50% better than the MSCI EAFE Index, one of the most widely followed developed market benchmarks. The international fund is also more than triple the returns posted by the U.S. version of the ETF.
The PowerShares International Buyback Achievers Portfolio tracks the Nasdaq International BuyBack Achievers Index, which requires companies to "have effected a net reduction in shares outstanding of 5% or more in its latest fiscal year."
Additions and deletions are made to the index once a year in July. The U.S.' PowerShares Buyback Achievers Portfolio follows the same methodology, but its index makes changes in January. Companies are eligible for inclusion in the two buyback ETFs after they have reduced shares outstanding by 5% over the trailing 12 months.
Said another way, the mere announcement of a repurchase program, even a large one, does not guarantee a company admission into either of the PowerShares buyback ETFs. The 5% reduction in shares outstanding threshold must be met. That requirement is significant because it must be met every year for a company to remain in the buyback indexes, ensuring IPKW and PKW hold shares of companies that are consistent repurchasers of their own stock.
PKW has a new competitor, the SPDR S&P 500 Buyback ETF (SPYB). That ETF focuses on "the 100 companies in the S&P 500 with the highest buyback ratio in the last 12 months. The buyback ratio is defined as the ratio of the total cash put toward buybacks in the trailing year and the market capitalization of the company as of a reference date," according to State Street.
IPKW is smaller and younger than its domestically focused relative, but that has not stopped the $41 million international buyback ETF from delivering impressive 2015 gains. With interest rates low throughout the developed world, foreign companies are taking a page from the playbook of their U.S. counterparts, boosting buybacks with cheap debt. That could bode well for IPKW.