Thursday, March 1, 2012

Pimco launches new active ETF for small investors

Pimco, Pacific Investment Management Co., the huge financial company managed by star manager Bill Gross, opened an exchange-traded version of its Pimco Total Return Fund.

Trading today under the ticker symbol TRXT, Gross’s Pimco Total Return ETF started with a net asset value of a mere $100.

“We’ve had two to three years of internal discussions,” Gross said in a telephone interview yesterday from his office in Newport Beach, California. “The challenge is obvious. We could fall flat on our face or we could roar like a lion in a year or two or three and become the largest ETF.”

The new ETF is designed to blend the trading flexibility and accessibility of ETFs with the stock- or bond- picking ability of active management, is a test case for investor interest in a segment that has attracted less than 0.5% of the $1.13 trillion in U.S.-registered ETF assets.

The potential for growth has spurred Pimco, along with at least two dozen other money managers to vie for a slice of the active ETF business, which would compete with the $9.41T mutual fund industry.

Gross, in the interview, said it still bothers him that high brokerage-firm minimums stopped his mother from buying shares of Pimco Total Return Fund, which became the world’s largest mutual fund in 2009. The new ETF aims to get smaller investors into the strategy"

“Small investors don’t always have access to active management with a higher yield and a higher total return,” “We are hoping ‘mom and pop’ can do a little bit better than the bond market at a time of historically low yields.”

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