The strong performance and cash inflows of PIMCO Total Return ETF (BOND) after a little more than two months of trading could speed up the introduction of more actively managed ETFs by fund managers.
BOND was the best-performing intermediate-bond fund in April, according to investment research firm Morningstar.
The fund has been the fastest growing ETF ever, with over $700 million in assets already, reports Timothy Strauts in a recent Morningstar article. The extremely high trading volume of 200,000 shares per day keep the bid/ask spread around 2 cents or less.
The ETF version of PIMCO's popular Total Return Fund does not use derivatives like swaps, futures or options. This makes the ETF a more traditional fixed-income play.
Furthermore, the transparency of BOND has not been a burden like some managers and investors were afraid of. The real-time transparency has been a huge roadblock for the growth of the actively managed ETF category. However, the success and overall sentiment since BOND has debuted has been positive for actively managed ETFs. In fact, many market insiders think BOND has paved the way for the sector.
"Just five years ago, many doubted that fixed-income would work in the ETF structure. Just four months ago, many still doubted whether actively managed ETFs would work. PIMCO Total Return ETF is discrediting both myths simultaneously," Morningstar notes. "The fund is already the third-largest actively managed ETF."
Tisha Guerrero contributed to this article.