On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the PIMCO Multisector Bond Active ETF (PYLD) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF overall.
Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week.
Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, the Head of Research at VettaFi. And if you go to VettaFi.com you’ll find all the tools you need to be a savvier, smarter ETF investor.
And to get more details on the new newsworthy, trending and timely ETFs that we talk about here. Todd Rosenbluth. Great to chat with you again.
Todd Rosenbluth: It’s great to be back, Chuck.
Chuck Jaffe: Your ETF of the Week is…
Todd Rosenbluth: The PIMCO Multisector Bond Active ETF. PYLD.
Chuck Jaffe: PYLD, the PIMCO Multisector Bond Active ETF. And if that sounds familiar to folks, well, it was just over a year ago. It was in March of 2024 that you made this the ETF of the Week. And it is very unusual for you, in your time doing ETF of the Week, but even before that, for us to have things that come back, especially when it’s only been a year.
But, the fund was pretty new then. Why is it back now?
Todd Rosenbluth: So, it’s doing really well. PYLD, in the past year, is outperforming the index that we think is appropriate. It’s outperforming many of its actively managed fixed income peers. And this is an environment where we still believe active management makes sense. We’ve talked about active management in the short term space. We thought a core plus strategy would be appropriate.
And we’re going to be talking with the team at PIMCO during VettaFi’s upcoming Income Symposium in about a week’s time.
Chuck Jaffe: In terms of this particular fund. One of the interesting things to me is that more than some bond funds, especially those that were — that are not multi-sector, this fund took it on the chin when we had the tariff announcements. Like basically [on]April the 4th, it had a nosedive. If you follow the 200-day moving average, it fell below its 200-day moving average.
It has now recouped all of that and it’s actually going above its 200-day moving average. So, this fund seems to be a little more news sensitive and volatile than some other bond funds. Even though it’s done well, that news sensitivity at a time when, wow, the market is very sensitive to news?
Todd Rosenbluth: So, listen, I think investors should have both risk-on and risk-off fixed income exposure. This is a bit more risk-on. This is an income strategy. It takes on some additional risk to get roughly a 6% yield. You get the benefits of active management with a skilled team. This is PIMCO that’s behind this. And Dan Ivascyn, who runs the PIMCO Income Mutual Fund, which is a several billion dollar — tens of hundreds of billions of dollars — I’m sorry, I don’t have the numbers in front of me right now — mutual fund that’s running a slightly different version of the strategy.
We’ve got expertise behind this. If you’re willing to take on a little bit of risk for that income, this is a great fund. And I don’t think a day or a week or period of time is the right way to judge a bond mutual fund. In the past year, since we’ve been here, it’s up 9%. It’s outperforming its Morningstar category this year. It’s outperforming its Morningstar category all of last year.
This is a strong fund, even though it doesn’t yet have a three-year track record. And real quick if I can, it’s gathered $2 billion this year. That’s also what caught our eye. So it’s nearly doubled in size in just the four plus, or not even four months of the year.
This is a great strategy for folks that are looking for active management within fixed income.
Chuck Jaffe: So, let’s talk a little bit because we do with ETFs of the week about where something fits in a portfolio. Because this is active and multi-sector. So, this is a case where if you’ve got index funds you might be looking for active management. If you’ve got treasuries you’re looking for other things. But if somebody got any multi-sector exposure or if they want to have control and say, I want to know how much I’ve got in high yield versus munis versus whatever. This would, you know, does this not always play well with what else you might have in a portfolio?
Todd Rosenbluth: Yeah, so you have to believe in active management to want to invest in this fund. You have to believe that the bond market is more volatile, more complicated, isn’t necessarily for you to try to navigate on your own. But this can play nicely with other funds. We’re actually going to be talking about this strategy and talking with WisdomTree, who’s behind that fund we talked about last week, USFR, on our Income Symposium.
One is obviously a risk-off Treasury strategy. This Pimco fund, PYLD, is a bit more risk-on. But the benefits of diversification — the benefits of diversification — say that twice, I just did. The benefits of diversification shines through with this ETF. You have exposure to all the tools that are in the fixed income universe, with an experienced management team behind it.
Chuck Jaffe: I know you like the performance of this fund, but since it is an income driving strategy, we should talk. What’s its current yield?
And some people have told me that I don’t ask you often enough about expense ratios. And bond funds when they’re based on indexes are notoriously cheap. This expense ratio, a little bit higher. Obviously you feel that it’s worth it. But do you have a limit on how high you’re going to go on an active bond ETF when it comes to expense ratios?
Todd Rosenbluth: So, let me do the first part first, second part second, perhaps. The yield on this is roughly 6%, which is compelling certainly in this environment. The expense ratio is 55 basis points. This is active management, so if you don’t want active management, you want a low cost index core based product. There are products from iShares and Vanguard and State Street, among others, that you can get for less than ten basis points.
This fund is outperforming its benchmark, an index-based product from iShares that I pulled up beforehand, IUSB, by about 200 basis points in the past year. That’s net of fees. So, to me, in this case, it’s worth it. Not every active fund is worth it. Not every active fund is in that 50 basis point — 50 to 60 basis point range.
That’s probably a good range for fixed income. But yeah, it’s quite possible we’ll come back and talk about a fund that is less expensive or more expensive. Fees do matter. They’re not the only thing that matters.
Chuck Jaffe: Yeah. That’s part of why ultimately you know there’s that mixed bag about talking about it. On the one hand, fees are guaranteed and returns are not. On the other hand, yeah, you’re paying more and you can hate to pay more, but you’re getting better returns. At least you have been on this fund since it opened. That’s worth doing. So, it’s a balance, isn’t it?
Todd Rosenbluth: It is. Look, sometimes I want to eat a cheap meal that’s fast and easy to prepare too quickly, and I don’t care as much. Other times, I want something where I want the experts cooking the food, the right style for it. That, I think, is a good example of what PIMCO brings to the table. Pun intended.
PIMCO brings a lot of expertise to the table. 55 basis points is worth it for this fund — how it’s performed so far.
Chuck Jaffe: And in this case, we definitely can smell what you are cooking! It’s the PIMCO Multisector Bond Active ETF, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff as always. We’ll talk to you again next week!
Todd Rosenbluth: Yeah, let’s seehttp://moneylifeshow.com/my hourl
what we’re having for lunch next time.
Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And I am Chuck Jaffe, and I’d love it if you check out my hourlong weekday show at MoneyLifeShow.com, or by going wherever you find your favorite podcasts. And if you’re looking for information on your favorite ETFs or what might be your next favorite ETF, make sure you check out VettaFi.com, where they’ve got all the tools you need to be a better investor.
They’re on Twitter or X at @Vetta_Fi, and Todd Rosenbluth, their head of research, my guest here on the ETF of the Week. He’s on X as well at @ToddRosenbluth.
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