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PIMCO Total Return ETF Hits $3 Billion in Assets


PIMCO Total Return ETF (BOND) has gathered $3 billion in assets in a little over seven months to become the most successful actively managed exchange traded fund launch ever.

In fact, the fund overseen by Bill Gross is among the 10 top-selling ETFs this year even though it wasn’t launched until March. [The 10 Best-Selling ETFs of 2012]

BOND is the ETF version of PIMCO Total Return Fund, the world’s largest mutual fund with about $278 billion in assets. The vaunted fund, also managed by PIMCO bond guru Bill Gross, was introduced in 1987.

The ETF clone allows investors and advisors access to PIMCO Total Return Fund’s strategy with low costs, transparency and the ability to trade during the day.

“As an active ETF, BOND will be required to disclose its portfolio holdings daily. This will be the first time that investors will be able to see PIMCO’s macroeconomic views in real time through the holdings of the ETF,” writes Morningstar analyst Timothy Strauts in a profile of the fund.

“Although the holdings will differ between funds, PIMCO uses a sophisticated trade allocation process to allocate shares of securities to the different funds following the Total Return strategy on a pro-rata basis. This means that the ETF will get new positions at the same time as the mutual fund,” the analyst said.

The ETF has an expense ratio of 0.55%. It held total net assets of $3.01 billion as of Oct. 8, according to PIMCO.

BOND’s success could be a turning point for traditional mutual funds and entice more firms to launch ETF versions of their popular active funds. [Will PIMCO ETF Mark Beginning of the End for Mutual Funds?]

PIMCO Total Return ETF delivered a return of 8.3% for the six months ended Sept. 30 to outperform its benchmark, the Barclays U.S. Aggregate Bond Index, by more than 4 percentage points.

BOND has benefitted from an underweight to U.S. Treasuries and an overweight position in mortgages. [PIMCO ETF ‘Well Positioned’ for Fed’s Mortgage Buying]

PIMCO Total Return ETF

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.