Gundlach’s ETF Hits $1B; Outperforms BOND

The SPDR DoubleLine Total Return Tactical ETF (TOTL), the actively managed ETF that marked Jeff Gundlach’s entry into the ETF space, reached its first $1 billion in assets this week, just shy of its sixth month in the market.

It’s hard not to draw parallels between this milestone for TOTL, which came to market in February, and the trajectory of competing Pimco Total Return ETF (BOND | C).

Second Big Splash
BOND, too, is an actively managed ETF that brought a big-name bond investor into the ETF fray: Bill Gross. The fund, launched in 2012, is the ETF version of the PIMCO Total Return Fund (PTTRX) created by Gross. And partly thanks to that star manager name, it went on to gather its first $1 billion in assets in about three months. TOTL isn’t all that different.

But there are a few reasons for TOTL’s success with investors that go beyond Gundlach’s star power (and to be clear, Gundlach doesn’t manage the fund alone—it’s a three-person team).

For starters, the strategy has done well relative to BOND. It has also outperformed a passive strategy tracking the Barclays Agg index, such as the iShares Core U.S. Aggregate Bond ETF (AGG | A-98).

Low Duration, US Debt Title
That outperformance, shown in the chart below, is tied to exposure differences, which include a focus on lower duration than AGG, and a tilt toward U.S. debt.

Chart courtesy of StockCharts.com

TOTL has also benefited from what some call “Pimco fatigue” among advisors, or the slew of bad press Pimco has faced in the wake of Bill Gross’ sudden departure from the firm last year.

Gross departure clearly dented the following on BOND, which hasn't necessarily been helped by the ongoing SEC probe regarding whether BOND inflated returns in its early days, misleading retail investors. That investigation is still taking place.

Bottom Flows Line
Whether advisors have chosen to avoid BOND for now, or have found in TOTL a perfectly good alternative, the reality is this: Since TOTL came to market in late February, BOND has faced net outflows of about $6.5 million. Meanwhile, TOTL has raked in more than $837 million.

BOND remains the second-largest active ETF in the market today, with $2.5 billion in asset—right behind its fellow PIMCO ETF, the PIMCO Enhanced Short Maturity Strategy (MINT | B).

But TOTL’s asset milestone does suggest that the competition in this segment of fixed-income ETFs is heating up.

Contact Cinthia Murphy at [email protected].