BOND uses a similar investment style as the institutional share class PTTRX, following PIMCO’s macroeconomic views on security exposure and allocating many of the same active bets. The ETF version has outperformed the mutual fund over the past year, but BOND has recently began to fall behind PTTRX – the ETF is up 0.1% while PTTRX is up 0.2% over the past month. PIMCO, though, believes the ETF will more closely reflect the mutual fund in the future.
Since its inception, the Total Return fund has been able to outperform its bencmark by a little over 1% annually. Former manager Gross attributed the excess returns to short-duration credit risk, intermediate maturity bond exposure and “rolling down the yield curve” to earn extra capital gains, and selling volatility through option sales.
The Total Return fund has been increasing its credit sector allocations as a result of the company’s “New Neutral” secular forecast where bonds and stocks look fairly priced. BOND includes 29% U.S. government bonds, 12% mortgage bonds, 31% US credit, 4% emerging markets and 24% cash equivalents.
BOND has a 0.55% expense ratio, 2.1% 30-day SEC yield and a 5.05 year duration.
For more information on the fixed-income space, visit our bond ETFs category.
Max Chen contributed to this article.