BOND And Beyond: Top ETF Launches Of 2012
This has been another banner year for the ETF industry, and a big story is Bill Gross’ splashy debut in the world of exchange-traded funds. But it isn’t the only story.
For one, the success of the Pimco Total Return ETF (NYSEArca: BOND) tells a broader tale of the hunger for yield that prevails in this post-crash era of financial repression, as six of the 10 most successful ETF launches this year were focused on fixed income.
Even more broadly, 2012 is also a year when fund sponsors showed keen efficiency in rolling out the strategies that investors seemed to be craving.
But if ETF investors are quick to conclude that 2012 is the year of BOND, they can be excused.
After all, the ETF version of $260 billion Pimco Total Return Fund (PTTRX)—the biggest mutual fund in the world—was the most successful launch of the year.
It took BOND just 2.5 months to reach the $1 billion milestone—faster than any other fund in the 20-year history of ETFs save for the SPDR Gold Shares (NYSEArca: GLD), which took three days in November 2004 to hit the $1 billion bogey.
In 10 months, BOND has become a $3.7 billion ETF with just $600 million fewer in assets than all the 162 other ETF launches this year, combined.
The $4.3 billion all those other funds gathered were in a broad range of strategies ranging from global high-yield bonds to inverse copper funds to hedge fund replication strategies.
If that doesn’t highlight just how well received BOND was, I don’t know what will.
But as I said, just because BOND was such a powerhouse doesn’t mean other issuers don’t have their own success stories to hang their hats on.
If the past year taught us anything, it’s that investors and advisors are desperate for yield and that issuers have been falling over each other to issue products to satisfy their needs.
If CalPERS is taking hedgies out, ETFs may be coming back in.
As valuations grow uncomfortably high, ‘quality’ ETFs makes more sense—if you can figure out just what quality means.
‘Smart beta’ almost surely means loss of more market share for active managers.
Be careful of your assumptions (and headlines!) about volatility ETFs.