PIMCO Total Return ETF (NYSEArca: BOND), which is managed by bond guru Bill Gross, has made a big splash on the active side of the business, although most of the assets in the ETF industry reside in passively managed funds that replicate benchmarks. [PIMCO Helps Put Actively Managed ETFs on the Map]
“There are now 60 actively managed funds, up from 1 in 2008. So far, seven (or 11.7%) have failed,” CNBC’s Greenberg reports.
Rowland said there are several ETFs on the watch list from major fund companies.
“My guess is they know the day is coming when assets are going to transfer from mutual funds to ETFs, and they understand they won’t get nearly the fees they get from ETFs as mutual funds,” he told CNBC. “But at least they’ll be able to say they have a track record.”
Rowland’s list excludes new ETFs with less than six months of track record to give them a so-called incubation period. Products are added to the list when average daily trading volume falls below $100,000 — or if assets drop under $5 million.
The theory is that products with low assets aren’t as profitable, and may end up being closed by their providers. However, larger ETF providers are better-positioned to subsidize unpopular funds than smaller firms.
PIMCO Total Return ETF has attracted significant assets since the March launch due to the vaunted track record of manager Bill Gross. Many financial advisors like to see at least three years of track record before investing with active managers.