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August 01, 2009 at 04:00 AM
The ETF market has a new face and it’s Pacific Investment Management Company (PIMCO).
The Newport Beach, Calif.-based firm is well-known for its diverse menu of fixed-income investments, like the PIMCO Total Return Bond Fund (PTTAX) which is managed by the firm’s legendary co-founder Bill Gross. And now PIMCO is looking to replicate its success in managing mutual funds to the realm of ETFs.
The PIMCO 1-3 Year U.S. Treasury Index Fund (TUZ) began trading in early June. The fund focuses on U.S. Treasuries with short-term maturities and is benchmarked to the Merrill Lynch 1-3 Year U.S. Treasury Index. With maturities of one to three years, price fluctuations may be low relative to longer-dated bonds, yet yields may be generally higher than shorter-term instruments such as Treasury bills or government money market funds.
“PIMCO’s new ETF platform provides investors with broader access to investment management services,” says Mohamed A. El-Erian, PIMCO’s chief executive officer and co-chief investment officer. “By launching our first ETF, PIMCO is diversifying the range of products that we offer to both long-standing and new clients around the world.”
TUZ has a temporary fee waiver that reduces its annual expense ratio to 0.09 percent. After two years, TUZ’s fund expenses are expected to have a small increase.
