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PIMCO Branching Out Into ETFs, Alternatives


PIMCO’s alternative asset fund offerings are gaining traction as investors hedge against rising interest rate risks. With PIMCO expanding on its exchange traded fund presence, we could even see more alternative ETF offerings down the line.

PIMCO saw an average $7.7 billion in new assets through the first three months of the year as investors moved into alternative fixed-income funds, reports Jason Kephart for InvestmentNews.

Alternative assets help lower the risk of a fixed-income portfolio, while maintaining low-volatility characteristics associated with fixed-income assets. [Special Report: Alternative ETFs]

“We think we can generate pretty consistent, not spectacular, returns that won’t be adversely affected with interest rates [by using alternatives],” Jacob Wolkowitz, an investment manager at Accredited Investors Inc., said in the article.

“We are rethinking fixed-income,” Jeffrey Layman, chief investment officer at BKD Wealth Advisors LLC, said in the article. “The first stage was investing in satellite bond holdings like high-yield and emerging-markets debt, but those have been so bid up, they look like they will earn their coupons, at best.”

Among the alternative fixed-income space, the number of offerings is growing. Specifically, there were only 18 nontraditional bond funds available in 2008 and now there are 52, according to Morningstar.

Popular PIMCO alts bond strategies include the $34 billion PIMCO All Asset Fund (PASAX) and the $24 billion PIMCO Unconstrained Bond Fund (PUBAX).

Recently, PIMCO announced that it has gained regulatory approval to launch three more actively managed bond ETFs based on existing mutual fund offerings. If the money manager continues to expand on its active ETF presence, we might see PIMCO’s alternative strategies in the ETF wrapper. [PIMCO Readies Three More Bond ETFs]

Advisors who are interested in learning more about alternative investments may sign up for the Alts Virtual Summit conference slated for May 15, 2013. The conference will provide information on various alternative investment strategies at the comfort of your own home or office.

For more information on the ETF industry, visit our current affairs category.

Max Chen contributed to this article.