PIMCO Launches New Active Muni Bond ETF
February 2nd 2010 at 12:33pm by Tom Lydon
The exchange traded fund (ETF) family just got a little bit bigger. PIMCO has begun trading a new municipal bond fund that will give investors the opportunity to invest in a municipal bond portfolio that is actively managed.
Accrding to PIMCO, the PIMCO Short Term Municipal Bond Strategy Fund (NYSEArca: SMMU) will be made up of short-term, high-credit quality bonds that carry interest income, which is exempt from federal tax and, in some cases, state and local taxes. [Grail Advisors launches new active bond ETFs.]
PIMCO does not rely on rating agencies for credit analysis. Instead, the fund company will research each muni bond. PIMCO has more than 20 years of experience in dealing with municipal bonds.
The active management style offered will allow the fund manager to invest in issuers and securities that PIMCO endorses. Most importantly, the firm will be able to manage capital gains and losses in a way that will minimize the tax effect of gains and harvest losses when necessary. [Beware of a bond bubble.]
The ETF will be accessible to any investor. The fund discloses all underlying holdings in the portfolio on a daily basis. [PIMCO's other muni ETF.]
ohn Cummings is the portfolio manager for the fund. The management mee is 0.35%, total annual operating expenses is 0.55% and net annual operating expenses is 0.35%.
For more information on new ETFs, visit our new ETFs category.
Max Chen contributed to this article.
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