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.