PIMCO said its two new exchange-traded funds, the PIMCO Build America Bond Strategy Fund (BABZ) and the PIMCO Investment Grade Corporate Bond Index Fund (CORP), began trading on Tuesday.
The BAB fund, trading near $50.70 on Wednesday, is an actively managed ETF that excludes municipalities with poor credit quality. The corporate bond fund, trading close to $100.60 on Wednesday, is an index fund that tracks the Bank of America-Merrill Lynch U.S. Corporate Index.
“These new funds broaden investor access to two important fixed income areas — Build America Bonds and investment-grade corporate bonds — using the efficient, transparent ETF format,” said Tammie Arnold, managing director and head of PIMCO’s global ETF business, in a statement.
The bond shop now has four active ETFs and eight index ETFs. PIMCO says that although the BAB program is scheduled to expire at the end of 2010, the firm is optimistic the program will be extended.
The BAB Fund seeks to capture attractive yield opportunities in municipal-bond sector while also avoiding securities from municipalities that PIMCO believes face deteriorating credit quality.
It is managed by John Cummings, executive vice president and head of PIMCO’s municipal bond desk. The management fee is 0.45%, and the total annual operating expense is 0.55%.
The new corporate bond ETF aims to track its benchmark index “with an optimized exposure to investment grade U.S. corporate debt issues that are primarily component securities of the benchmark” and “avoid those securities that the firm believes may be hard to trade or deemed to have the highest risk of credit loss,” the company said in a press release.