PKW is an interesting option for a core U.S. equity holding, says Morningstar's Ben Johnson. The fund's portfolio is that of listed companies which have reduced net shares outstanding by 5% over the previous 12 months.
The result is a portfolio of extremely profitable, highly cash-generative companies, with managements focused on shareholder value. 80% of the fund's assets are in firms which Morningstar deems to have an economic moat.
The only tarnish, says Johnson, is a pricey expense ratio of 0.71%, but PowerShares recently launched an international version of the same fund (IPKW) - the price tag on that is somewhat lower, so there's hope pressure will mount to eventually cut the fee on PKW.