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 (NYSEARCA: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 (NYSEARCA:BND), which has a 0.10% expense ratio and a 1.71% 30-day SEC yield, and the iShares Barclyas Aggregate Bond Fund (NYSEARCA: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.