PIMCO Total Return ETF (NYSEArca: BOND) is known as the exchange traded fund version of the famous Total Return (PTTRX) mutual fund — both are managed by bond guru Bill Gross. Although the ETF has only been trading for 2.5 months, the latest version of Bill Gross’s strategy has outperformed.

“It is the fastest-growing active ETF ever, with more than $700 million in assets. BOND has not had the liquidity issues that some new ETFs have when they are brand new. It has a high average trading volume of more than 200,000 shares per day and bid/ask spreads of two US cents or less most of the time. To top it off, the ETF was launched right as the Total Return strategy was outperforming the market,” Timothy Strauts for Morningstar wrote in a recent article. [PIMCO ETF Paves the Way for More Active ETFs]

So, how does the ETF version compare with the original mutual fund? To compare, the mutual fund has returned 1.84% from February 29 through May 4, when BOND began trading. In comparison, BOND has returned 4.1% over this period, bettering the mutual fund by 2.26%, reports Strauts.

There are two major factors why BOND has outperformed its predecessor, over the short amount of time. First, BOND does not use derivatives in its portfolio, and ETFs in general, are restricted from using these tools in any future launches. This makes it so the funds are on opposite sides of the spectrum regarding portfolio make-up and total number of holdings. BOND invests directly in bonds. [Evaluating PIMCO Total Return ETF Performance, Liquidity]

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