How PIMCO Manages Its Active ETFs | ETF Trends

While PIMCO is a relatively newer player in the exchange traded fund market, the fund company’s offerings have made a big splash in the industry, especially after Bill Gross, founder and co-chief investment officer, adapted his flagship Total Return fund into an ETF investment vehicle.

The PIMCO Total Return ETF (NYSEArca: BOND) has grown to $3.8 billion in assets since it began trading in March. The BOND ETF has a 0.55% expense ratio and a 2.25% 30-day SEC yield. Since its inception, the ETF has gained 10.1%, compared with the 4.9% rise in the flagship Total Return Bond Fund. [Why We Bought PIMCO Total Return ETF]

Moreover, there has been growing interest in the PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT) as an alternative to money market funds with the SEC mulling over potential changes. MINT has a 0.35% expense ratio and a 0.69% 30-day SEC yield.

The two offerings also stand out from most bond ETFs market in that both are actively managed, instead of passively tracking an underlying index. With PIMCO ETFs, investors have been attracted to the trusted brand and the firm’s extensive bond expertise.

At a recent conference, Vineer Bhansali, Managing Director at PIMCO, helped shed light on how their bond funds have managed to hold up so well, especially the BOND ETF, which has outperformed the original. In an Ignites article, Bhansali pointed out that Bill Gross attributed the performance to three factors:

  • Hard work. ” I know we’re all there 4:30 or 5 in the morning, we’re all there 6 in the evening,” Bhansali said. “We’re there managing money in a vehicle-agnostic way. And ETFs fall right into that same basket of what we’re doing anyways.”
  • Flexibility. “When cash comes in, we can look at the market and find out what’s the best way to invest that money,” Bhansali added.
  • Opportunities beyond Treasuries. Short-term Treasuries are yielding below 1%, the benchmark 10-year note is around 1.6% and 30 years are under 3%. “So, if you’re an active manager, it’s not too hard to figure out ways of beating that index,” Gross said. “Deploy cash where there’s better return for the same amount of risk.” [PIMCO ETF Manager Bill Gross Buying Munis on Looming Taxes]

For more information on bond funds, visit our bond ETFs category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own BOND.

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.