Pimco working on plans to launch further active ETFs

Apr 6th, 2012 | By | Category: Fixed Income

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In an interview earlier this week with CNN Money, Bill Gross, Pimco co-founder and manager of the Pimco Total Return strategy, said he was pleased with the performance of the recently launched Pimco Total Return ETF (BOND) and that Pimco was already working on plans to launch a number of other actively managed ETFs.

Pimco working on plans to launch further active ETFs

In an interview with CNN Money, Bill Gross, Pimco co-founder and manager of the Pimco Total Return ETF, said that Pimco had plans to launch further actively managed ETFs.

Although Pimco hasn’t yet filed prospectuses for specific ETFs with the Securities and Exchange Commission, the US financial regulator, Gross told CNN Money that follow-up ETFs would include funds that invest in different sectors of the bond market, such as corporate debt and mortgage-backed securities, as well as those that offer global diversification.

Since launching on 1 March this year, the Pimco Total Return ETF has already accumulated over $328 million in assets, putting it comfortably in the top ten of actively-managed ETFs by assets under management.

“I’m really satisfied with the volume, and with the narrow bid-ask ratio, which is reflective of interest and the future size of the fund,” Gross told CNN Money. He is hopeful that the core bond strategy will “be the biggest bond ETF one day.”

In the interview, Gross said that expanding the range of ETFs Pimco offered made commercial sense. According to Gross, stocks and bonds will be stuck in a low-return environment for the next few years and that “investors should accept the near inevitability of less than double-digit returns”.

Therefore, with only modest expected returns, Gross anticipates investors to favour ETFs over traditional mutual funds since they typically come with lower expense ratios, thereby resulting in less drag on net performance.

Many analysts are watching the Pimco Total Return ETF closely and expect it to be something of a bellwether product for the nascent ‘active ETF’ sector. If successful – which, based on recent performance and current AUM, looks increasingly likely – the fund is expected to encourage more firms to launch active ETFs.

For the original article, ‘Pimco’s Gross: More ETFs in the works’, please visit CNN Money:



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