July 29, 2008 at 2:00 pm by Tom Lydon
The world’s largest bond fund manager is finally getting into the bond exchange traded fund (ETF) market.
Pacific Investment Management Co., better known as Pimco, filed with the Securities and Exchange Commission (SEC) for a line of bond ETFs, reports Murray Coleman for Index Universe. The first fund with track the Lehman Bros. Aggregate Bond Index, which is one of the most widely followed U.S. benchmarks.
Two other ETFs that follow the same index have gathered more than $11 billion in assets: the iShares Lehman Aggregate Bond Index (AGG) and the Vanguard Total Bond Market (BND).
Pimco manages about $224 billion in U.S. mutual fund assets. The firm has a long history of active management, but when it comes to ETFs, they’ll be exploring both active and passive strategies.
If Pimco gets into active ETFs, it will be joining funds such as the Bear Stearns Low Duration Portfolio (YYY), which happens to be not only the first active ETF, but the first active bond ETF. PowerShares followed up with the PowerShares Low Duration Fund (PLK).
Pimco’s entree into the ETF marketplace is great news. Interest rates are at record lows, and since the stock market is still down, an asset manager like Pimco could be a welcome player in the ETF space.
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