The exchange traded fund PIMCO Total Return Fund (NYSEArca: BOND) now has doubled its assets to $2 billion. The rapid growth of BOND has set the actively managed ETF ball rolling and has fared well due to investor preference for bonds.
An uncertain economic outlook and volatile markets prompted investors to pull $129 billion from U.S. stock market funds in the 12 months to the end of June, according to Morningstar, while pouring $196 billion into bond funds. [ETF Asset Growth Remains Strong in 2012]
Dan McCrum for Financial Times reports that the success of BOND also marks a turning point for Bill Gross, the fund manager of both BOND and the original mutual fund that paved the way. Currently, the Total Return Strategy mutual fund has $268 billion in assets under management. Bill Gross is now ranked within the top 5% of bond managers this year, reports Morningstar.
According to Bloomberg data, BOND is up 6.3% since launching and the mutual funds has gained 4.2%. [Why PIMCO Total Return ETF is Beating Its Mutual Fund Counterpart]
The success of BOND has opened up the pathways for actively managed ETFs. This segment of the market has been in the queue but has failed to get off the ground until recently. BOND has made many managers realize that active management with an ETF is possible, despite any transparency issues or front running worries. [PIMCO Total Return: ETF or Mutual Fund Wrapper?]
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.