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Bond giant Pacific Investment Management Co (PIMCO) is finally branching out into the ETF market.

According to the Wall Street Journal, the passive Pimco 1-3 Year U.S. Treasury Index Fund will launch next week. It will compete directly with the iShares 1-3 Year Treasury Bond ETF (SHY) and will offer an expense ratio of .09% compared to the .15% charged by the iShares fund.

PIMCO also plans to use its experience managing the world's largest bond mutual fund to roll out a range of actively managed bond ETFs. Its cache as a bond manager would instantly make it the leader in that space.

Active ETFs, however, have been slow to gain ground, perhaps because the "ETF" brand has been so closely associated with passive indexing. (Its about time to start separating passive and active ETFs with a new acronym for the active variety. ATFs? METFs (Managed ETFS)?

PIMCO's entrance into the market marks a significant milestone for the industry, as even the most storied mutual fund managers begin to see the writing on the wall.

Source: PIMCO ETFs Launch Next Week