Pimco, the world’s largest bond fund manager, rolled out a broad index-based U.S. Treasurys ETF designed to give investors exposure to debt across the yield curve in what amounts to a laddering strategy using a single security.
The Pimco Broad U.S. Treasury Index Fund (NYSEArca: TRSY) is built on the BofA Merrill Lynch Liquid US Treasury Index, which tracks the performance of the three most recently issued two-year, three-year, five-year, seven-year, 10-year and 30-year U.S. Treasury notes and bonds. The index holds $1 billion face value of each constituent security.
The new ETF could be attractive to investors who may not have conviction about how changes in the yield curve will play out or who simply want exposure to the entirety of the most investable part of the Treasury’s universe.
Additionally, because each of the fund’s holdings is equal-weighted at par value, TRSY’s duration will remain relatively steady, keeping its role in any portfolio strictly defined. The only other product on the market that's similar to TRSY is the PowerShares 1-30 Laddered Treasury Portfolio (NYSEArca: PLW).
TRSY has a net expense ratio of 0.15 percent, Newport Beach, Calif.-based Pimco said on its website. The fund will rebalance monthly.
The PowerShares ETF, which is based on the Ryan/Mergent 1-30 Year Treasury Laddered Index, had about $76 million in assets as of Nov. 1, according to data compiled by IndexUniverse.com