Pimco Plans Strong-Country Bond ETFs

August 04, 2011

Pimco lays out plans for three single-country bond ETFs designed around some the strongest developed-market economies.

Pimco, the world’s largest bond fund manager, filed paperwork with the Securities and Exchange Commission detailing three index bond ETFs, each separately targeting three developed countries that have weathered the global financial crisis of the past four years remarkably well—Australia, Canada and Germany.

The three funds will each track indexes that own public and private credits issued by U.S. or non-U.S. entities and are denominated in each of the respective currencies, the Australian dollar, the Canadian dollar and the euro. The three funds and their respective indexes are the:

  • Pimco Australia Bond Index Fund; BofA Merrill Lynch Diversified Australia Bond Index
  • Pimco Canada Bond Index Fund; BofA Merrill Lynch Diversified Canada Bond Index
  • Pimco Germany Bond Index Fund; BofA Merrill Lynch Diversified Germany Bond Index

 

The three countries are at the top of any list of developed countries that are thriving even as much of the rest of the developed world has continued to be mired in a slow, faltering recovery from the worst market crisis since the Great Depression. That sense of a deep downturn was renewed on Aug. 4, as the Dow Jones industrial average plunged 512.76 points, or 4.3 percent, to 11,407.82.

Even with a sluggish recovery, both Canada and Australia have been benefiting mightily from the commodities boom of the past decade. Germany’s high-value export driven economy has meanwhile been almost-uniquely able to take advantage of demand for its products in the rapidly growing emerging markets.

While 80 percent of each fund’s assets will normally be invested in its respective index, all three funds will also be able to hold cash and investment grade, liquid short-term instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and shares of affiliated bond funds, according to the filing.

Pimco didn’t specify ticker symbols or proposed annual expense ratios for the three bond funds.

 

 

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