PIMCO Launches Two New Bond ETFs | ETF Trends

PIMCO is expanding its footprint in the bond exchange traded fund (ETF) space by launching two new additions to its lineup.

The two new funds are:

  • PIMCO Investment Grade Corporate Bond Index Fund (NYSEArca: CORP)
  • PIMCO Build America Bonds Strategy Fund (NYSEArca: BABZ)

BABZ is actively managed and will invest in investment-grade Build America Bonds. The fund has an introductory expense ratio of 0.45%. When the introductory period expires, the expenses will rise to 0.55%. [Invest In the Recovery With BABS.]

There are a couple of Build America Bond ETFs already trading, though both are passively managed:

  • PowerShares Build America Bond Portfolio (NYSEArca: BAB)
  • SPDR Nuveen Barclays Capital Build America Bond (NYSEArca: BABS)

For CORP, PIMCO will use its own optimization strategy in order to ensure the fund holds liquid securities and a low risk of default. The fund has a 0.32% expense ratio, though 0.12% of the fee will be waived until October 2011, at least. [The Case for BABS Bonds.]

Not unlike BABZ, CORP will also have some competition in the investment-grade corporate bond space: iShares $ Investment Grade Corporate Bond (NYSEArca: LQD).

For full disclosure, Tom Lydon’s clients own LQD.

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.