The last of the rock star portfolio managers is about to see how big his name really is.
The SPDR DoubleLine Total Return Tactical exchange-traded fund (TOTL) launches tomorrow. It will be managed by Jeffrey Gundlach, who also runs the DoubleLine Total Return Bond Fund (DBLTX), a top-performing mutual fund. TOTL is the 26th ETF to be launched this year, but it is possibly the most important as a test of whether active management can ever thrive inside the ETF industry.
Actively managed ETFs haven’t exactly inspired investors. There are 120 of them with a total of $19 billion in assets. That may sound like a lot until you realize it’s less than 1 percent of ETF assets. Even the ones with three-year track records of beating their benchmarks are struggling to attract investors.
A rare exception to the rejection of active management by ETF investors has been Bill Gross and the Pimco Total Return Bond ETF (BOND). BOND collected $1 billion in assets within three months when it came out in 2012—unheard of for an ETF. Assets eventually topped $4 billion. Gross left Pimco in September of last year and is running a Janus mutual fund. BOND’s assets are now a bit more than $2 billion.
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Active management’s struggle extends beyond ETFs. Index mutual funds took in $125 billion last year, while ETFs took in $243 billion. Meanwhile, actively managed mutual funds lost $52 billion, according to the Investment Company Institute.