Looking to build on the success of its PIMCO Total Return ETF (NYSEArca: BOND), PIMCO launched two more actively managed exchange traded fund versions of its popular fixed-income mutual fund strategies.
The actively managed PIMCO Diversified Income Exchange-Traded Fund (NYSEArca: DI) and the PIMCO Low Duration Exchange-Traded Fund (NYSEArca: LDUR) began trading Thursday, January 23. The two ETFs will likely employ a sampling technique to provide equivalent exposure as their mutual fund counterparts, similar to how BOND covers a portion of the flagship Total Return Fund’s holdings. [PIMCO Readies Three More Bond ETFs]
DI provides exposure to global credit markets and includes a range of credit sectors, such as global investment grade and high-yield corporates, emerging market debt and other global credit instruments. The ETF is managed by Curtis A. Mewbourne, managing director and generalist portfolio manager at PIMCO.
The fund has 33 holdings, with an effective duration of 5.2 year, and comes with a 0.85% expense ratio.
Country allocations include U.S. 41.7%, Mexico 9.1%, Italy 8.0%, France 7.7%, Russia 5.8%, Brazil 5.4%, U.K. 4.4%, Indonesia 4.2%, Poland 2.8%, Venezuela 2.7%, Peru 2.2% and Colombia 2.1%.
Credit quality includes government 14.6%, AA+ 3.0%, A+ 2.2%, A 2.1%, A- 7.6%, BBB+ 11.4%, BBB 6.1%, BBB- 6.9%, BB+ 11.7%, BB 8.0% BB- 16.1%, B- 4.5% and not rated 1.9% – everything rated BB and below is considered speculative, junk grade debt.
The DI ETF is an adaptation of the PIMCO Diversified Income Fund Institutional (PDIIX), which has a 0.75% expense ratio. However, DI is still less expensive than the 1.15% expense ratio for the PIMCO Diversified Income Fund A-Shares (PDVAX).
PDIIX has generated an average annualized 7.0% return over the past 10-years and 12.5% over the past 5-years. The mutual fund has a 3.41% 30-day SEC yield.
The other new ETF launch, LDUR, provides diversified exposure to high quality, short-term bonds across mortgage-backed, Treasury, corporate and international fixed-income sectors. The ETF is managed by Marc P. Seidner, a managing director and generalist portfolio manager at PIMCO.
The fund has 5 holdings, with a 2.26 year effective duration, and comes with a 0.55% expense ratio.
So far, the underlying bonds are all from the U.S. LDUR currently holds most of its weight in U.S. government bonds at 92.7%.
LDUR is an ETF adaptation of the PIMCO Low-Duration Fund Institutional (PTLDX), which has a 0.28% expense ratio. The PIMCO Low Duration Fund A-Shares (PTLAX) comes with a 0.80% expense ratio.
PTLDX has generated an average annualized return of 4.6% over the past 15-years, 3.9% over the past 10-years and 5.0% over the past five-years. The mutual fund has a 0.28% 30-day SEC yield.
For more information on new product launches, visit our new ETFs category.
Tom Lydon’s clients own shares of BOND.