The biggest actively managed ETF in the world is overshadowed by a familiar name.
Bill Gross, move over.
Last month, jittery fixed-income investors loyal to the Pimco brand took duration risk off the table in anticipation of the Federal Reserve’ “tapering” measures and, as a result, toppled Gross’ Total Return ETF from its perch as the world’s biggest actively managed ETF and replaced it with another Pimco strategy.
The Pimco Total Return ETF (BOND), with current assets of $4.03 billion, was surpassed on Sept. 3 by a fund in its own family, namely the PIMCO Enhanced Maturity Strategy Fund (MINT), a money-market proxy that currently has $4.15 billion in assets under management, according to data compiled by IndexUniverse.
Since its debut in March 2012, BOND has been the second most successful ETF launch in the history of ETFs behind the SPDR Gold Shares (GLD A-100), the world’s first physical bullion ETF which garnered more than $1 billion in the first three days of its launch in November 2004.
However, BOND’s latest setback shouldn’t be viewed as a strike against the fund but, rather, as a sign of an investment market setting up for the end of the post-crash era of extraordinarily loose monetary policy—and as more confirmation of investors’ fondness for Pimco, the world’s biggest bond fund manager.
As an example, in August, Pimco’s ETF unit experienced inflows of $120 million bringing its total assets under to management to $13.23 billion, good for 11th place among the biggest ETF providers in the U.S. Meanwhile, bigger rivals such as BlackRock and SSgA experienced withdrawals of $4.34 billion and $19.52 billion, respectively.
MINT—as noted, a money market equivalent ETF, holds a hodgepodge of high quality global debt with durations primarily in the leaning 0-1 year period.
Meanwhile, BOND actively manages its portfolio of investment-grade bonds primarily within a duration of three to 10 years, according to the firm’s website.
In August, investors trimmed interest-rate risks and bailed out of Treasurys as signs of a recovering U.S. economy began to take further shape. While today’s government job report of 169,000 new jobs created in August missed economists’ projections of 180,000 jobs, nevertheless it’s being widely viewed as slow and steady progress and something that the Federal Reserve may interpret as a positive step for the U.S. economy leading up to is Sept. 18 meeting.