January 11, 2012

Bill Gross Touts PIMCO Total Return ETF at Virtual Summit

‘We’ve been looking forward to the development of an array of ETFs at PIMCO,’ says Gross

Bill Gross (left) and Liz Ann Sonders at Schwab Impact last year. Bill Gross (left) and Liz Ann Sonders at Schwab Impact last year.

PIMCO CIO Bill Gross promoted the upcoming launch of an exchange traded fund version of his PIMCO Total Return Fund at the ETF Virtual Summit, a four-hour online event held on Tuesday that was attended by nearly 1,000 advisors.

“This has potential,” said Gross when asked by Virtual Summit mastermind and ETF Trends publisher Tom Lydon about the launch. “We’ve been looking forward to the development of an array of ETFs at PIMCO.”

Gross pointed to the long-term success of the Total Return Fund, while acknowledging the tough year the fund saw in 2011, when it experienced significant net outflows after he bet against the bond market.

PIMCO Expects ETF to Be as Big as Total Return Fund

“The Total Return Fund is the largest in the world, and I hope and we expect at PIMCO that the Total Return ETF will be the biggest as well,” Gross said. “We don’t always do it perfectly, as 2011 suggests, but over time we do it well, and we hope we can do the same in the ETF space as we have in the total return space over 25 years.”

Gross added that 2012 will bring slow growth as debt deleveraging persists all over the developed world, in both the United States and Europe.

“The biggest challenge is delevering, but it presents the opportunity of borrowing at a lower rate of interest,” Gross said, noting that investors must be sure that the assets they’re buying this year are creditworthy and present low risk exposure.

“We would avoid the deleveraging opportunities in Euroland,” Gross said, adding that better fixed-income opportunities can be found in the U.S., Canada, Mexico and Brazil.

ETF Virtual Summit Offers Full Day of Events

In the ETF Virtual Summit’s Exhibit Hall, PIMCO’s virtual booth included a video about the company, links to its website, advisor resources, information about PIMCO’s ETFs team, a beach towel giveaway, a survey, a booth and scheduled chats.

Indeed, the entire day featured a sometimes overwhelming wealth of information. For anyone familiar with a live conference set-up, the virtual summit’s plaza, exhibit hall, auditorium, resource center and networking lounge all felt familiar.

At one point in the lounge’s communication center, for example, 41 participants talked about the day’s agenda and upcoming panel discussions, while at the same time, in State Street’s SPDR virtual trade show booth, 17 participants chatted about the afternoon’s alternative-investment speakers and requested product guides before the panel discussion began.

In one chat, the Options Industry Council’s Eric Cott jokingly offered free Starbucks coffee at the OIC booth. In another, UBS Wealth Management’s David R. Kelly asked whether anyone had seen an update to an iShares summary of various ETF portfolio offerings.

A Defense of the Growing ETF Universe

Lydon suggested in the morning’s kickoff video panel that the virtual summit is timely because of misunderstandings about the ETF universe.

“A lot of people are throwing stones at ETFs as they get bigger and bigger and bigger,” Lydon said.

The panel then considered the issue of active management within the ETF space, with Matt Hougan, president of ETF analytics at IndexUniverse, saying, “investors have proved themselves very fickle in the ETF space.”

Active management in ETFs would be more accurately stated as the movement of portfolio assets around in the space, and not staying in a single, actively managed ETF, Hougan asserted.

“An ETF is simply a packaging strategy that gives everyone access,” he said.

Morningstar Director of ETF Research Scott Burns answered that he is more positive and constructive on active management, saying that “the efficiency of the ETF wrapper” will lead more companies like PIMCO to move into ETFs.

“ETFs give anyone access to what’s available on the New York Stock Exchange,” Burns said. “Active ETFs have to become the answer.”

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