PIMCO's MINT: The King of Cash

Mar. 8.10 | About: PIMCO Enhanced (MINT)

PIMCO Enhanced Short Maturity Strategy Fund (NYSEARCA:MINT) is this week's ETF Pick of the Week.

Rationale: It makes sense to have plenty of cash in a portfolio, especially when valuations and uncertainty are high. It is also nice to have some powder dry to take advantage of sharp pullbacks.

This week’s pick is an ETF from bond giant PIMCO one of the world’s largest bond mutual fund managers. PIMCO Enhanced Short Maturity Strategy Fund (MINT) is only four months old but has already amassed more than $59 million in assets and trades more than 200,000 shares on an average day. MINT is an actively traded ETF, a category which so far has not attracted much investor interest. PIMCO seems to have overcome that obstacle with this ETF.

MINT is a possible alternative to money market funds for many investors. The ETF holds only investment-grade short-term fixed income instruments with about 400 different holdings, fully disclosed to investors every day. MINT does not use options, futures, or swaps to help generate returns, another aspect that may appeal to more conservative investors.

All of MINT’s holdings are denominated in U.S. dollars. Investors should keep in mind the 0.35% expense ratio.

MINT is certainly different than our recent Turkey (NYSEARCA:TUR) pick. Nearly half of its assets reside in investment-grade credit securities and another 36% is in government debt. The remainder is allocated to mortgage securities. Given the short maturity of its holdings, MINT should effectively reduce volatility for investors seeking to enhance the return on their cash while keeping risk minimized.

MINT is currently trading just over its issue price of $100 at $100.27 – exactly where it should be. To go with a stable cash equivalent not tied to long-term CDs, consider PIMCO’s MINT.

Disclosure: None