Pimco Total Return Fund manager Bill Gross said June 30 was a “D-Day” for investors as the Federal Reserve’s second quantitative easing program wrapped up.
Now Pimco has disclosed the fees for its planned exchange traded fund version of Total Return Fund, suggesting the ETF may launch soon. [Pimco Files Expense Ratio for ETF]
When the ETF does list, it will mark a D-Day of sorts for the roughly $12 trillion mutual fund business.
The Pimco ETF could open the floodgates for more mutual-fund firms to introduce actively managed ETFs.
The move “sets the tone that a gorilla in the industry is getting aggressive in the actively managed space,” said Dan Weiskopf, head of global ETF strategies at Forefront Capital LLC.
“There has been a lot of hesitation from the mutual-fund industry on actively managed ETFs because of the disclosure of trading,” said Weiskopf in an interview this spring. “Pimco is saying that it wants to do it and that it can be done.” [Pimco ETF Filing Fallout]
Pimco Total Return ETF would be managed by Bill Gross and give investors access to the investment strategy and philosophy of the massive mutual fund.
However, the ETF will not be allowed to invest in derivatives due to new regulatory restraints, unlike Total Return Fund, according to Bloomberg.
Still, an ETF managed by Gross would likely raise the profile of the overall business, which accounts for about $1 trillion in assets in the U.S. Most ETFs track indexes.
For some investors, an ETF version of Total Return Fund could make sense. Unlike mutual funds, investors can trade ETFs during the day, and they also offer low fees and tax efficiency.
The Pimco ETF would be structured as a “stand-alone” ETF rather than as a separate share class of Total Return Fund.
The investment manager already oversees several ETFs. For example, with over $1 billion in assets, Pimco Enhanced Short Maturity Strategy Fund (NYSEArca: MINT) is an actively managed ETF in its lineup. [New Pimco ETF Targets Corporate Bonds]
Pimco Total Return Fund
