Although investors saw heavy outflows from PIMCO Total Return bond funds after Bill Gross’ departure from the firm last year, experts say investors in the exchange-traded fund space could see healthy inflows into bond ETFs in 2015.
Investors are likely to be attracted to bond ETFs, partly because the overall ETF market keeps getting bigger, the experts say. In addition, the funds will flow in as PIMCO archrival DoubleLine prepares to launch an actively managed ETF that focuses on total returns.
“Both of those ETFs are very interesting,” said Matt Hougan, president of ETF.com, which will present its annual Inside ETFs conference next week in Hollywood, Florida. “Advisors will buy either the PIMCO Total Return Active ETF or Gundlach’s ETF, which hasn’t launched yet.”
Asked whether Gundlach will announce his ETF’s launch at the conference, Hougan would only say “there’s definitely a reason he agreed to fly to Florida and talk.”
Soon, advisors will be faced with the question of choosing between DoubleLine and PIMCO, according to Hougan.
“Those are different firms, different philosophies, different leaders,” he said. “We’ll see over three years which will be a better bet.”
On Sept. 26, PIMCO co-founder Gross departed the firm for Janus, and the PIMCO Total Return mutual fund and ETF both started to see large outflows.
According to data from Morningstar Inc., the PIMCO Total Return mutual fund lost $17.9 billion of estimated net flow in September, $32.3 billion in October and $9.7 billion in November, while the actively managed ETF lost $631 million in September, $437 million in October and $66 million in November. The mutual fund’s total net assets dropped from $237 billion in January 2014 to $143 billion by December; the ETF’s assets dropped from $3.5 billion in January to $2.4 billion in December.
In contrast to the PIMCO Total Return outflows, the DoubleLine Total Return mutual fund saw net inflows of about $804 million in November 2014, Morningstar said. The DoubleLine fund had almost $39 billion in total assets in November.