We have spent a considerable amount of time discussing fixed income ETFs and how some segments have gotten bruised in the recent downdraft, and one actively managed product in the space stands out impressively lately, that being BOND (PIMCO Total Return, Expense Ratio 0.55%).

The fund, which debuted in March of 2012 and has been covered numerous times in this column dating back to its inception, now has about $3.5 billion in assets under management in spite seeing about $150 million flow out of the fund year to date.

BOND is also challenging yet another all-time product high since inception at current levels, having traded as high as $109.02 on an intraday basis last Friday on rather heavy volume. How has the fund managed to buck the recent trend across most Fixed Income indexes lately which has been volatility and weakness primarily?

Looking closely at the underlying bond holdings of BOND provides some clues on how this performance has been possible, as we see a >53% weighting to U.S. issued bonds, making up 75% of the “Duration Weight” of the portfolio according to fund literature as well.

Since BOND is positioned in the “Intermediate” duration category, this is an important statistic. Furthermore, we see allocations within the fund to U.S. Treasury Notes as the largest holding (2.50% Coupon bonds maturing in 2024) with positions in several internationally issued bonds as well from countries such as Canada, Italy, the U.K., and Sweden for example.

The bulk of the positions in the fund currently are Government issues (>37%), followed by a >12% weighting to AA+ issues, as well as lesser exposure across the spectrum of A through C rated bonds. Classified in the greater “Core Fixed Income” or “Total Bond Market” segments, this kind of broad fixed income exposure is expected with the twist here in BOND being that the fund is actively managed of course by bond giants, PIMCO.

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