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Choppy trading has been the dominant theme on Wall Street this week as investors continue to deal with mixed economic data releases on the homefront coupled with looming threats from Europe. The U.S. government posted a larger-than-expected budget deficit this past month, while retail sales also dropped off, adding to the list of uncertainties plaguing investors’ confidence. Amidst the flurry of trading, PIMCO has filed plans with the SEC to beef up its lineup with three active bond ETFs, while Franklin Templeton is also making strides to join the industry with their first proposal [see also Calling All ETF-Friendly Financial Advisors].

PIMCO Adds Active ETFS

The world’s largest bond fund manager, PIMCO is planning to add three more active ETFs to its growing lineup of fixed income offerings [see PIMCO SEC Filing June 7, 2012]:

  • PIMCO Diversified Income Exchange-Traded Fund: This will be an ETF counterpart for the existing mutual fund, PDVAX, which currently has $5.6 billion in assets under management. PIMCO will use economic growth expectations, interest rates and credit analysis along with a variety of other factors to select its underlying holdings, which may include money market instruments, government and corporate bonds, as well as mortgages from both U.S. and non-U.S. issuers.
  • PIMCO Low Duration Exchange-Traded Fund: This will be the ETF counterpart for the existing mutual fund, PTLAX, which currently has $21.3 billion in assets under management. This ETF will invest primarily in investment-grade debt securities while limiting its foreign currency exposure to 20% of its total assets. Furthermore, the filing also mentioned that the average portfolio duration of this fund will be from one to three years.
  • PIMCO Real Return Exchange-Traded Fund: This will be the ETF counterpart for the existing mutual fund, PRTNX, which currently has $23.2 billion in assets under management. The underlying holdings of this ETF will consist primarily of inflation-indexed bonds of varying maturities from both the U.S. and non-U.S. governments [Try our Mutual Fund to ETF Converter Tool absolutely free of charge].

Franklin Templeton Looks to Preserve Capital

San Mateo-based investment manager Franklin Templeton is planning to enter the ETF space with an actively-managed bond fund [see Franklin Templeton SEC Filing June 8, 2012]:
  • Franklin Templeton Short Duration Government ETF: This ETF will seek a high level of current income (as is consistent with prudent investing) while also looking to preserve capital. The fund will hold a diversified portfolio of primarily investment-grade, short-duration debt securities issued by the U.S. government.

Disclosure: No positions at time of writing.

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Source: PIMCO Files For Active Bond Funds, Franklin Templeton Plans First ETF