Pimco to launch Global Advantage Inflation-Linked Bond Strategy ETF (ILB)

Apr 25th, 2012 | By | Category: Fixed Income

Factor Investing Strategy Briefing - Thursday 29th June 2023 - The Connaught, Mayfair. Please join us for our annual smart beta and factor investing event, featuring Goldman Sachs Asset Management, FlexShares, First Trust, MSCI and WisdomTree. Please register now if you would like to attend.

Bond fund giant Pimco has announced the forthcoming launch of the Pimco Global Advantage Inflation-Linked Bond Strategy ETF (ILB), an actively managed ETF designed to offer investors the potential for long-term returns above inflation.

Pimco to launch Global Advantage Inflation-Linked Bond Strategy ETF (ILB)

The Pimco Global Advantage Inflation-Linked Bond Strategy ETF (ILB) will be managed by Mihir Worah (pictured), managing director and head of Pimco’s real return team.

The fund, to be listed on the NYSE, will be managed by Mihir Worah, managing director and head of Pimco’s real return portfolio management team, and will actively invest in global inflation-linked bonds and currencies.

ILB continues the expansion of Pimco’s range of actively managed ETFs, which marry Pimco’s experience managing global fixed income investments with the tradability of an ETF vehicle, providing investors intraday pricing and daily portfolio disclosures in a single share class.

With globalisation exposing investors to price pressures and growth patterns of countries around the world, Pimco believes that investors need to consider a fuller set of inflation-oriented investments, rather than solely the investor’s domestic market. By exploiting a wider, global selection of inflation-linked bonds and currencies (the fund will be split approximately 70% developed and 30% emerging markets), ILB aims to deliver a more diversified inflation protection strategy.

Importantly, ILB will also be actively managed against a gross domestic product (GDP)-weighted benchmark, with the intent to better align investors’ exposure to countries experiencing stronger growth. This is in contrast to traditional market-cap weighted benchmarks, which allocate relative to the inflation-linked bond issuance of each country.

“In this uncertain global economy, some of the key drivers of growth are developing economies, which are often more sensitive to inflationary pressures like commodity prices,” said Worah. “Our forward-looking ‘Global Advantage’ approach aims to expose investors to the inflation-linked bonds and currencies of these faster-growing economies, potentially resulting in higher real yields than traditional investing using market cap-weighting.”

Pimco is one of the world’s largest managers of inflation-linked bonds and manages more than $100 billion in dedicated inflation hedging strategies. The fund will list on 1 May 2012.

ILB follows the recent launch of the actively managed Pimco Total Return ETF (BOND), which launched on 1 March 2012 and has already gathered over $539m in AUM.

Tags: ,

Leave a Comment