October 11, 2012

PIMCO’s Total Return ETF Races to Record $3 Billion in Assets

New milestone makes it the fastest growing and largest actively managed ETF

PIMCO's Bill GrossScorching might be the only way to describe it. In the seven months since its release, PIMCO Total Return ETF (BOND) has attracted $3 billion in assets, making it the fastest growing and largest actively managed ETF in the short history of the space.  

In fact, the fund run by legendary bond manager Bill Gross is among “the 10 top-selling ETFs this year even though it wasn’t launched until March,” according to ETF Trends’ John Spence.

And that’s not all. PIMCO, with $1.8 trillion in total assets under management also has the No. 2 actively managed ETF by assets, PIMCO’s Enhanced Short Maturity Strategy. That ETF rings in with about $2 billion in assets. WisdomTree’s Emerging Markets Local Debt ETF is the third largest actively managed ETF with $1.4 billion in assets.

As one might expect, analysts describe PIMCO’s actively managed ETFs as validation for the actively managed argument overall.

“But it’s no more than a validation now than it was when it reached $2 billion in assets,” said Morningstar ETF analyst Tim Strauts. “Even then it was the largest actively-managed ETF. It helps to have a star manager attached to it and the strong performance of the corresponding Total Return mutual fund."

“This is a watershed event. You’re taking the largest actively managed mutual fund and making it more accessible, more transparent and cheaper, which is appealing to many potential investors,” Todd Rosenbluth, an ETF analyst with Standard & Poor’s Capital IQ, told AdvisorOne when the ETF was launched back in March. “Smartphones come out on a regular basis, but they don’t get the same buzz as when a new iPhone comes out. There’s a cachet behind this because of the strong brand name and the track record that Bill Gross and his team have established.”

PIMCO Total Return ETF switched ticker symbols from TRXT to BOND on the NYSE Arca in April and has a gross expense ratio of 0.55%, which is notably cheaper than the 0.85% charged for the more established PIMCO Total Return A (PTTAX), according to Rosenbluth. PTTAX underperformed intermediate investment grade bond fund peers in the past 12 months ended Feb. 24, but has an above-average five- and 10-year annualized record. 

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