PIMCO ETF Puts Focus on Active ETFs | ETF Trends

The launch of PIMCO Total Return ETF (NYSEArca: TRXT) this Thursday will give actively managed funds another chance at the spotlight. Less than five years ago the first actively managed ETFs launched, but the response has been muted so far.

“That will draw attention,” said Noah Hamman, chief executive officer of AdvisorShares, a Bethesda, Md., marketer of actively managed ETFs. “But, mostly, it will take time,” for actively managed ETFs to prove that they outperform passively managed funds. That is to say, index-based funds. [PIMCO Total Return ETF Set to Begin Trading Thursday]

The fund manager to TRXT will be PIMCO’s bond guru Bill Gross. He oversees PIMCO Total Return Fund, which has about $250 billion in assets and it is the largest mutual fund. The total assets in this one mutual fund makes the $5.2 billion in assets in actively managed ETFs seem like a blip on the radar, reports Tom Steinert-Threlkeld on Financial Planning.

The ETF business has about $1 trillion in assets overall, with most of the total in index-linked funds. Currently, ETFs account for 35% of all trading volume on the NYSE. [Three Things You Need to Know About Active ETFs]

Over the past few years, actively managed ETFs have been trying to gain market share. The technical difficulties due to structural differences in ETFs versus mutual funds have kept providers from launching a large, successful, actively managed ETF. The daily disclosure of holdings and the fear of front running have been a few of the concerns, due to the total transparency that ETFs allow. [Active Vs. Passive ETFs]

Investors and financial advisors will be closing watching the performance of PIMCO Total Return ETF and if assets move from the mutual fund to the ETF version.

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.