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PIMCO Total Return Active ETF Message Board

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  • axsjpinaz axsjpinaz Dec 24, 2012 3:42 PM Flag

    Too Late To Get In?

    So as I understand as long as interest rates are low then any volatility in the market results in investor leaving equities and BOND is good shelter so goes the demand share price goes up. Thats what's been drivng share price from its initial offering around $96/share. A market dip (fiscal cliff ) should drive this share price up. When the Fed begins to increase interest rates (2014, 15?) or some time just before that other bonds are going to be more attractive than the ones BOND holds so demand for BOND is going drop and so goes share price. I'm planning to move from BOND into equities gradually in the next market pull back 15%.

    Sentiment: Buy

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    • axsjpinaz, I don't think you are correctly understanding how the ETF works. Current NAV is 109.00 and that is the actual value of the assets held in the fund. Market price is 109.09, a .09 premium over NAV. Market price can be higher or lower than NAV, dependent on current perception of trend. Over time, the NAV has risen from 96 to present 109 because the managers are buying and selling bonds in the fund, and making money at it! A new SEC ruling may be good for BOND because the managers will also be able to use derivatives (options, swaps, etc.) in the ETF, like they can in sister mutual fund PTTRX.

      I'm with you on moving more into equities this year, but BOND will still be OK because of excellent management. When interest rates start rising they will always be exchanging assets to ensure some yield. Total return will not be as high, but will still be positive.

      Sentiment: Buy

107.95+0.02(+0.02%)Sep 30 6:30 PMEDT