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PIMCO Sets Low Price for Total Return ETF; El-Erian on QE3

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In a filing with the SEC Thursday, Pacific Investment Management Co. announced its new PIMCO Total Return Exchange-Traded Fund will charge 55 basis points, or 0.55%.

PIMCO announced April 20 that it was seeking permission to roll out a similar version of its popular Total Return Retail mutual fund in an exchange-traded fund wrapper.

In related news, PIMCO head Mohamed El-Erian (left) on Thursday put “low odds on a third round of U.S. monetary stimulus unless there is a ‘major further deterioration’ in the U.S. economic outlook,” according to a live blogging question and answer session on

“We would assign a low probability (at) this stage to QE3 given the general recognition that the forward-looking cost-benefit analysis has shifted away from the potential benefits and toward greater costs and risk,” El-Erian wrote, according to Reuters. “Therefore, it would take a major further deterioration in the economic outlook, combined with willingness by the Fed to take greater reputational and political risks.”

The new ETF was being watched by the industry. “When you first hear of something like this you think, ‘OK, actively managed ETFs have arrived,’” Morningstar ETF Analyst Robert Goldsborough said in an interview with AdvisorOne at the time. “No one can say they still need to be tested as a product class when someone like Bill Gross gets in the game. This is big.”

While Goldsborough noted PIMCO already offers actively managed ETFs—PIMCO Intermediate Municipal Bond Strategy Fund and PIMCO Enhanced Short Maturity Strategy—he expects the new ETF to attract “a tremendous amount of investor interest.”

“I don’t think anyone can argue Bill Gross isn’t a fantastic investor,” Goldsborough said, adding Gross has been named Manager of the Year and Manager of the Decade by Morningstar. “He has made some contrarian bets against the bond market recently, and you don’t bet against someone like [Gross]. That said, I don’t think the ETF version will differ that dramatically from the mutual fund, but how its managed might, meaning it might trade after the mutual fund.”


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