CORRECT: PIMCO Total Return Fund and ETF Vie for Cash

April 3rd at 10:25am by John Spence

PIMCO Total Return ETF (NYSEArca: BOND), the exchange traded fund version of the giant mutual fund, continued to attract more new cash in March as investors sought the expertise of bond maven Bill Gross.

Overall, the PIMCO Total Return Fund gathered $723.4 million in investor deposits last month, according to PIMCO.

Meanwhile, PIMCO Total Return ETF took in $284.7 million in March, according to IndexUniverse flow data.

BOND is the ETF version of PIMCO Total Return Fund that has been trading for a little more than a year. BOND has already grown to $4.6 billion in assets under management and is the biggest actively managed ETF. PIMCO Total Return Fund is the largest mutual fund with assets of roughly $289 billion.

The smaller size of BOND has allowed Gross to be more nimble, especially during the ETF’s early months. BOND has a trailing one-year total return of 11.1% to outperform the institutional share class of PIMCO Total Return Fund, which has gained 7.8%, according to Morningstar. The Barclays US Aggregate Bond Index is up 3.7% for the period.

Yet as the ETF continues to grow in size, analysts are warning investors to temper their performance expectations after BOND blew away its benchmark and mutual-fund counterpart during its first year. [Cash Influx May Cool PIMCO Total Return ETF’s Outperformance]

PIMCO Total Return Fund gathered $2.2 billion in the first quarter of 2013. Last year, investors added $18 billion to the fund, according to a Bloomberg report.

BOND carries an expense ratio of 0.55%. Institutional shares of PIMCO Total Return Fund have operating expenses of 0.46% while the A shares charge 0.85%.

“The ETF offers the unique opportunity to get the management expertise of one of the best active managers in a vehicle with far lower expenses than the retail share class of its sister mutual fund,” says Morningstar analyst Timothy Strauts in a review of BOND.

PIMCO Total Return ETF

pimco-total-return-etf

Story updated to correct PIMCO Total Return Fund flows.

The opinions and forecasts expressed herein are solely those of John Spence, 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.

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