On the other hand, PTTRX gets various bond exposures through swap agreements. Getting bond exposure through a swap agreement limits one’s ability to pick out individual credits because the swap often is based on a broader index. Therefore, re-allocating assets becomes expensive and risky for the portfolio manager, and can have a negative impact upon the market. [ETF Chart of the Day: BOND]
Secondly, when BOND was forged with about $10 million in assets under management. Gross was able to begin with a clean slate that had no “legacy positions”. The recent outperformance shows how a highly skilled active manager can add tremendous value in a small portfolio. BOND has about 300 positions, compared to the mutual funds’ 19,000 holdings.
However, it is best to be cautious before jumping into BOND and overlooking all else. The track record is very short for the ETF version of the Total Return Strategy. Things can turn fast in the bond market, as well as the stock market.
Tisha Guerrero contributed to this article.