PIMCO Readies Three More Bond ETFs
April 23rd at 8:23am by Tom Lydon
PIMCO has received regulatory approval to launch exchange traded fund adaptations of three mutual funds, similar to its highly successful PIMCO Total Return ETF (NYSEArca: BOND).
The actively managed PIMCO Diversified Income Exchange-Traded Fund (DI), PIMCO Real Return Exchange-Traded Fund (no ticker provided) and PIMCO Low Duration Exchange-Traded Fund (LDUR) registrations went through Monday, but no launch date has been scheduled, according to an emailed note. [ETF Chart of the Day: PIMCO Total Return]
The three new offerings would help PIMCO market three mutual fund strategies in an ETF wrapper, including:
- PIMCO Real Return Fund (PRRIX): 2.31% 30-day SEC yield
- PIMCO Low-Duration Fund (PTLDX): 1.27% 30-day SEC yield
- PIMCO Diversified Income Fund (PDIIX): 3.04% 30-day SEC yield
“The investments made by the ETFs and the results achieved by the ETFs at any given time are not expected to be the same as those made by other funds for which PIMCO acts as investment adviser, including funds with names, investment objectives and policies similar to the newly filed ETFs,” a PIMCO spokesman told Barron’s. The funds are “not intended to be clones of those funds in an ETF vehicle,” he said.
According to the most recent filing, the Diversified Income ETF will try to generate maximum total return through fixed-income assets, such as bonds, debt securities and other similar instruments issued by U.S. and non-U.S. public- or private-sectors with varying maturities. The diversified income fund has an average portfolio duration of between three to eight years, based on interest rate forecasts. DI will have an 0.85% expense ratio.
Duration is used to measure a bond’s price to sensitivity to changes in interest rates – changes in interest rates will have a greater effect on long duration bonds.
The Real Return ETF will try to generate maximum total return through inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies and corporations. Inflation-indexed bonds are structured to provide protection against inflation. The holdings’ duration will be within plus or minus three years of the Barclays U.S. TIPS Index, which has a duration of around 6.2 years. The ETF has a 0.55% expense ratio.
The Low-Duration ETF will try to generate maximum total return through a diversified portfolio of fixed income insturments of varying maturities, including bonds, debt securities and other similar instruments issued by various U.S. and non-U.S. public- or private-sectors. However, the portfolio’s average duration varies from one to three years, based on interest rates. LDUR has a 0.55% expense ratio.
The Funds’ portfolio are jointly managed by Bill Gross, Co-Chief Investment Officer and a founding partner of PIMCO, and Curtis Mewbourne, Managing Director of PIMCO.
For more information on new product launches, visit our new ETFs category.
Max Chen 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.