Chart — Large-cap US equities with significant buyback programs announced have handily outperformed the broad market year-to-date.
U.S. public companies have announced more than $1 trillion in aggregate share repurchases year-to-date according to data compiled by Bloomberg and strategists anticipate the pace of buybacks to accelerate further in coming quarters. In a report issued earlier this month, researchers at Goldman Sachs forecast that capital deployed in repurchase programs for the S&P 500 in 2022 may exceed prior records.
Reynolds Strategy has published a series of reports in recent months outlining how U.S. public pension managers are deploying record amounts of capital into credit markets. According to Reynolds much of this capital will ultimately be used to fund stock buybacks which could help the S&P 500 achieve fresh highs even if U.S. equities experience a near-term pullback driven by inflation anxieties.
The S&P 500 Buyback Index, which tracks 100 S&P 500 index constituents with the highest repurchase program rations, has outperformed the underlying benchmark by roughly 5% year-to-date.
Reynolds Strategy estimates that the 12-month total of U.S. public pension allocations to credit funds now exceeds $160 billion, surpassing the $122 pre-pandemic record set in 2019, with much of that capital ultimately earmarked for corporate repurchase programs.