PIMCO recently announced the due date for its active exchange traded fund version of the Total Return Fund. The new ETF may entice investors to this relatively untapped market space and could even draw assets away from the provider’s flagship fund.
The PIMCO Total Return Fund has provided an impressive performance over its 25-year lifespan, with a cheap institutional cost of 0.46% and a 0.90% expense ratio on its class A shares fund.
The fund provider will be launching its PIMCO Total Return ETF (NYSEArca: TRXT) on March 1. According to the fund prospectus, the TRXT ETF will have an expense ratio of 0.55%. While the new ETF has an expense ratio lower than the comparable class A mutual fund, it is still lower than most active ETFs, which tend to have expense ratios above 1%. [Previewing PIMCO Total Return ETF]
On a cost basis, some advisors and investors may opt to switch over to the ETF from the original fund. However, potential investors should be aware that the Total Return ETF will not be able to trade in derivatives, like futures, options and swaps, whereas the mutual fund has no such limits.
For more information on ETF 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.