Pimco in a regulatory filing Thursday said its planned Total Return Exchange Traded Fund will charge a management fee of 0.55%.
The ETF is expected to list soon and will be piloted by bond guru Bill Gross. The move is seen as a major step forward in the development of actively managed ETFs.
Assets in U.S.-listed ETFs have broken through $1 trillion, up 39% from last year. Most ETFs track passive indexes.
However, the new Pimco ETF will give investors access to the investment strategy of the bond giant’s flagship Total Return Fund. The mutual fund touts more than $240 billion in assets. [Pimco Files for Total Return ETF]
The move is a nod to active management with ETFs, and investors can expect more mutual funds to follow this move, reports Elizabeth O’Brian at SmartMoney.
Expect the ETF version of Total Return Fund to have potentially fewer holdings than the fund. [Pimco ETF Filing is ‘May Day’ for Mutual Funds]
Pimco will try to keep the performance of the two very close, because if the ETF outperforms, investors might flee the mutual fund altogether. [ETFs Gaining Momentum at Morningstar Confab.]
Pimco’s move is a “validation” of the active ETF format, Morningstar analyst Robert Goldsborough told SmartMoney. [Investors Miffed with Underperforming Funds Migrate to ETFs.]
The institutional share class of Total Return Fund has an expense ratio of 0.46%, Bloomberg reported. Unlike the Total Return Fund, the ETF would not be able to invest in derivatives, according to the report.
Pimco Total Return Fund
Tisha Guerrero contributed to this article.