The launch of PIMCO Total Return ETF (NYSEArca: TRXT) has forged a new path for the industry. The focus has moved to actively managed exchange traded funds and a new way for investors to construct their portfolios.
“It’s a giant step for active ETFs,” said Paul Justice, director of ETF Research at Morningstar, in a recent report. “Actively-managed funds are not as popular, and it can be an effective way for well-known managers to move funds around.” [PIMCO Puts Focus on Active ETFs]
Bill Gross, creator and manager of the $250 billion Total Return Fund, is behind the launch of TRXT and will be directing this ETF. Analysts believe that the fund company’s name will draw assets and success to the new product, reports Seana Smith for Fox Business.
“TRXT is paving the way into a different distribution channel for funds,” said Justice. TRXT will give average investors access to PIMCO’s successful Total Return strategy, but at a significantly lower fee, reports Smith. [A Look at PIMCO’s Planned Total Return ETF]
One key difference between the ETF and Total Return Fund is that the ETF version won’t be able to invest in certain types of derivatives.
TRXT will have to disclose portfolio holdings daily, which will give analysts a peek at Bill Gross’s strategy on a day-to-day basis. [Active vs. Passive ETFs]
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.