The 15 Most Important ETFs

October 06, 2015

BOND: PIMCO Total Return Active

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The launch of the Pimco Total Return ETF (BOND | B) was a turning point for the ETF industry, and not because BOND was the first actively managed ETF to come to market.

BOND was not even PIMCO's first foray into the ETF market—the PIMCO Enhanced Short Maturity Strategy (MINT | B) takes that credit, and it remains the asset manager's largest ETF, with some $4.2 billion in assets as of August 2015.

The turning point was that BOND brought Bill Gross into the ETF space. The world of predominantly passive strategies was now home to a celebrity active manager for the first time.

Gross, widely known as the "bond guru" who founded PIMCO and managed the world's largest bond portfolio—PIMCO's flagship fund—was now also an ETF portfolio manager.

Gross' entry into the fold helped pave the way for other active managers to follow. It also offered a significant endorsement to the ETF wrapper among the alpha-seeking crowd.

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The fund, built around the Barclays U.S. Aggregate Index, showed that transparency in active fixed-income portfolios was nothing to be afraid of.

"The Total Return ETF harnesses PIMCO's time-tested investment process and our skills as an active manager, and we believe it signals an important new phase in the development of the ETF marketplace," Bill Gross said at BOND's launch in 2012.

Indeed, BOND was transformative in the active ETF space. In roughly three months, the fund gathered its first $1 billion in assets, making it the most successful active ETF launch ever. Of the 1,700-plus ETFs in the market today, BOND's speed at asset-gathering remains second only to that of the SPDR Gold Trust (GLD|A-100), which reached $1 billion in assets just three days after its launch in 2004.

Perhaps something that helped propel BOND into the investor mainstream—beyond its star-name manager—was the resonance of its ticker.

What's interesting is that when the ETF came to market in March 2012, it was originally listed under the ticker "TRXT." But roughly a month later, Pimco went looking for a more visible name, just to discover that "BOND" hadn't yet been claimed by any issuer. The surprising discovery led to a rebranding that April of what became an icon in the active ETF segment.

Today Scott Mather, Mark Kiesel and Mihir Worah manage the portfolio following Gross' departure to Janus Capital in 2014.


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