The exchange traded fund space is dominated by passive indexing strategies. With the launch of the PIMCO Total Return ETF (NYSEArca: BOND), the Pacific Investment Management Company has kick-started the actively managed ETF arena.
Active ETFs represent an opportunity for firms that missed out on the original ETF rush for passive, or beta, strategies, which are dominated by companies like iShares, State Street Global Advisors and Vanguard. [ETFs and Mutual Funds Can Work Together]
Successful active ETFs will require active management teams with a solid track record and a well-known brand name to back the fund up, both of which PIMCO has.
BOND, the ETF version of the flagship $270 billion PIMCO Total Return Fund (PTTAX), the world’s largest mutual fund, has garnered over $2 billion since it began trading in March.
“The issue was, are investors choosing ETFs because they like passive investing or because of all the other positive attributes of ETFs?” Douglas Hodge, PIMCO’s chief operating officer, said in an InvestmentNews article. “I think we’ve proven that they’re choosing the vehicle. It’s not about active versus passive. As long as you can deliver performance, that is what investors want.”