The Significance of Pimco’s Active Bond ETF
Active management is associated more with bond mutual funds than ETFs. That began to change in 2012 when PIMCO (short for Pacific Investment Management Company) introduced the Total Return ETF, which trades under the ticker BOND. Although not the first management company to introduce a bond ETF – both iShares and Fidelity came to market earlier – PIMCO’s entry into active ETF management of a bond portfolio is significant. First of all, anything PIMCO does has a certain significance – it is a huge company with well over $2.21 trillion under management as of December 31, 2020. PIMCO’s move underlines the dissatisfaction that many retail investors have with the performance of their bond funds and their general dissatisfaction with the payouts from passively managed bond index funds in the ultra-low-interest environment of the post-crash era that followed the 2007 financial meltdown. PIMCO’s Total Return ETF (BOND) enables investors to access a similar portfolio to the Total Return Fund (PTTRX), which is the largest bond fund in the world but with significantly lower management fees. PIMCO’s Total Return Fund requires investors to pay a 3.75% front-end load (or sales commission) on Class A shares. Investors have gradually become savvier about load funds as the news that they generally underperform no-load funds has become more generally known. Although BOND’s growth slowed in 2016 in response to increasing competition and the mixed record of actively managed bond funds generally, BOND rapidly became one of the most successful ETF launches in history, with 1,141 holdings and $4.16 billion in assets as of March 22, 2021.
A List of Current Bond ETFS, Including Ticker Symbols and Expense Ratios
Below is the list of all actively-managed bond ETFs, together with their ticker symbols and gross expense ratios as of March 22, 2021:
PIMCO Total Return ETF (BOND), 0.57% PIMCO Enhanced Short Maturity Strategy Fund (MINT), 0.37% AdvisorShares Sage Core Reserves ETF (HOLD), 0.54% SPDR SSgA Ultra Short Term Bond ETF (ULST), 0.20% iShares Short Maturity Bond ETF (NEAR), 0.26% AdvisorShares Newfleet Multi-Sector Income ETF (MINC), 0.83% WisdomTree Emerging Markets Local Debt Fund (ELD), 0.55% Invesco Ultra Short Duration ETF (GSY), 0.23% PIMCO Intermediate Municipal Bond Strategy Fund (MUNI), 0.35% High Yield ETF (HYLD), 1.29% WisdomTree Emerging Markets Corporate Bond Fund (EMCB), 0.60% PIMCO Short Term Municipal Bond Fund (SMMU), 0.35% AdvisorShares FolioBeyond SmartCore Bond ETF (FWDB), 1.82% FlexShares Ready Access Variable Income Fund (RAVI), 0.26% First Trust High Yield Long/Short ETF (HYLS), 1.01% SPDR Blackstone Senior Loan ETF (SRLN), 0.70% First Trust Senior Loan ETF (FTSL), 0.86% RiverFront Strategic Income Fund (RIGS), 0.47% Fidelity Total Bond ETF (FBTD), 0.36% Fidelity Limited Term Bond ETF (FLTB), 0.36% Fidelity Corporate Bond ETF (FCOR), 0.36%
