“We’re proud of our relationships with retail firms in terms of distribution,” Gross said. Total Return Fund is the world’s largest mutual fund and Gross expects the same for the ETF. That title currency belongs to the roughly $95 billion SPDR S&P 500 ETF (NYSEArca: SPY)
“A big part of the cloning of Total Return likely has to do with financial advisors who are increasingly turning to lower-cost ETFs to build client portfolios,” reports Murray Coleman at Barron’s. “But there will be some differences between the two, one of which is that the ETF version won’t use options, swaps or futures. That could change if the SEC lifts its current ban against new ETFs trading in derivatives.”
When asked about his views on the markets, Gross said PIMCO sees the global economy slowing as banks and consumers continue to delever after the financial crisis. Countries in Europe and other parts of the world have too much debt and are also delevering as governments try to balance budgets, the fund manager said.
Meanwhile, Europe is to be avoided because of all the uncertainty and risk associated with the debt crisis. He likes the U.S. and emerging markets with relatively cleaner balance sheets, pointing specifically to Brazil, Mexico and Canada.
Above all, investors want to be in relatively safe assets in 2012 and capital preservation should be the focus. “It’s not a double-digit year,” Gross said. “It’s a 2% to 5% year.”
PIMCO Total Return Fund
Full disclosure: Tom Lydon’s clients currently own SPY.