Pimco Launches Actively Managed Commodity ETF

The fund aims to help hedge inflation although price gains are slowing.

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Reviewed by: Lisa Barr
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Edited by: Ron Day

Pimco, the bond investing firm with $21 billion in exchange-traded funds, launched a commodity ETF aimed at hedging inflation at a time when price increases are slowing as the Federal Reserve hikes interest rates. 

The issuer, whose 39 ETFs cover bonds, stocks and other assets, launched its Commodity Strategy Active ETF (CMDT) today. The fund, with an actively managed portfolio of commodities, dropped less than 1% in afternoon trading on the NYSE Arca exchange. 

CMDT is another in Pimco’s long line of actively managed ETFs, the first of which launched in 2009, when it was one of the first companies to do so. The $1.8 trillion fund shop, based in Newport Beach, California, says it’s the world’s largest actively managed ETF issuer.  

While active funds have largely underperformed passive, or index funds, Pimco says it believes the difference between the commodity market and the stock market opens up more opportunities to outperform the market, justifying the fund’s 0.64% expense ratio. A Pimco spokesperson told etf.com the prices of different commodities will diverge from each other more widely than will those of different stocks.  

While commodity prices soared during the pandemic as supply chain issues hampered the movement of goods, they’ve slumped in the last year. The Dow Jones Commodity Index dropped 9% in the past year, compared with the 5% return for the S&P 500.  

Oil prices have fallen significantly, down more than 35% from their mid-2022 highs, although they are still high compared to most of the last decade. A bright spot is gold, which has risen sharply due to the current instability in the banking sector. 

While inflation has nearly halved to 4.9% from more than 9% last July, it’s more than double the Fed’s 2% goal. Still, Pimco says falling inflation doesn’t mean investors will be turned off by the fund. 

“Sticky inflation is still a concern for investors,” a spokesperson told etf.com. “Though inflation is moderating, we expect it to remain elevated for some time.” 

 

Contact Gabe Alpert at [email protected] 

Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting and analysis to Barron’s Magazine, Investopedia and other publications.