PIMCO's Bill Gross is calling out rival passively indexed bond exchange traded funds that have a heavy allocation in low-yield Treasuries.
At a recent IndexUniverse conference, Gross boldly told financial advisors to swap out their Vanguard and iShares bond ETFs for the PIMCO Total Return ETF (BOND), reports Chris Flood for Financial Times.
"If you have clients in [Vanguard's] BND or [iShares] AGG, get them over [to BOND]," Gross said in the article.
Gross was referring to the Vanguard Total Bond Market ETF (BND), which has a 0.10% expense ratio and a 1.71% 30-day SEC yield, and the iShares Barclyas Aggregate Bond Fund (AGG), which has a 0.20% expense ratio and a 1.60% 30-day SEC yield.
The BOND ETF has a 0.55% expense ratio and a 2.05% 30-day SEC yield.
BOND has accumulated $2.7 billion since its March launch, and it has gotten attention as the ETF version outperformed the original flagship fund.
In comparison, the Vanguard and iShares broad bond offerings hold $17.6 billion and $15.5 billion, respectively.
Gross argued that the competition is too heavily invested in low-yield Treasuries. For instance, BND has 44.0% allocated to Treasury/Agency bonds and AGG has 36.2% in Treasuries. In contrast, BOND has 6% in Treasuries.
"I don't care about the fees. Just bring them over because you'll be helping them out. I can't guarantee it … but I think it's a pretty good bet," Gross said in the FT story.
Max Chen contributed to this article.