The reputation of Pacific Investment Management Company (Pimco) as a shrewd bond fund manager has served the company well. Soon, everyone will learn if that reputation will help it succeed in the burgeoning exchange-traded fund business.
The Newport Beach, Calif.-based fund manager has filed an application with the Securities and Exchange Commission to introduce an active bond ETF. If approved, the fund could serve as a model for future bond ETFs for both Pimco itself and even competing firms.
The ETF fixed income category is still relatively small and limited to products linked to indexes. According to ETFguide.com, there are just 63 bond products. By comparison, there are more than 640 equity-based products.
In the bond arena, the now defunct Bear Stearns Current Yield Fund (YYY) was the only actively managed ETF. The fund invested in short-term debt obligations, but never managed to attract enough assets to survive.
Having active bond ETFs would allow Pimco to enter an emerging product marketplace still largely unpopulated. It would also permit the company to have another distribution channel for its active management solutions.
No exact timetable on the launch of Pimco's ETFs has been given. Typically it takes the SEC around six months to allow new ETF products to trade.
Pimco is owned by Allianz. Through the end of the second quarter the company had $829.5 billion under management.