PIMCO Puts Actively Managed ETFs in the Spotlight
May 16th 2012 at 2:30pm by Tom Lydon
The success of PIMCO Total Return ETF (NYSEArca: BOND) has triggered speculation that more asset managers will follow PIMCO’s lead and introduce exchange traded fund counterparts for their most popular mutual funds.
BOND, a twist on Bill Gross’s flagship Total Return Fund, is drawing a robust following in its short two-month run. It had more than $800 million in assets under management as of mid-May, reports Rachel Konning Beals for MarketWatch. This ETF could pave the way for more actively managed ETFs. [PIMCO Total Return: ETF or Mutual Fund?]
PIMCO lending its name into the active ETF space is a game-changer for the entire industry. It’s one of those things where if you don’t get ahead of the times, then you are left in the dust trying to catch up. [PIMCO Paves the Way for More Active ETFs]
Large ETF providers such as State Street, BlackRock and WisdomTree are currently looking for a slice of the actively managed ETF market. They are all planning products or have them in the registration process with The SEC.
With these big-name brands essentially legitimizing this 0.5% corner of the $1.2 trillion ETF industry, this can only reinforce the smaller players already in the space. [Tom Lydon, Chuck Jaffe Talk ETF of the Week: PIMCO Total Return]
The actively managed ETF market has about $5.8 billion in assets under management, according to ETF Industry Association data. Of the 47 actively managed ETFs on the market today, 29 have been introduced since 2010. [ETF Chart of the Day: PIMCo Total Return]
This space will get bigger, but the growth is largely dependent on how well managers can maintain alpha. Managers will still have to justify their higher costs.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.