Pimco Enters ETF Market

They’re here!!

Mutual fund firm Pimco launched its first exchange traded fund Tuesday on the NYSE Arca

The PIMCO 1-3 Year U.S. Treasury Index Fund (TUZ) will track the Merrill Lynch 1-3 Year U.S. Treasury IndexSM. The ETF will charge a management fee of 9 basis points, or 0.09%. Index Universe says this is the lowest-cost fixed-income ETF on the market, undercutting the previous lost-cost leaders, the Vanguard Short-Term Bond ETF (BSV) and Vanguard Total Bond Market ETF (BND), by 2 basis points (0.02%).

The bond fund giant also filed to launch six other ETFs. These will cover longer-dated Treasurys and Treasury Inflation-Protected Securities, or TIPS, which resemble other Treasurys but adjust their principal to match changing prices.

  • Pimco 3-7 Year U.S. Treasury Index Fund
  • Pimco 7-15 Year U.S. Treasury Index Fund
  • Pimco 15+ Year U.S. Treasury Index Fund
  • Pimco Broad U.S. TIPS Index Fund
  • Pimco Short Maturity U.S. TIPS Index Fund
  • Pimco Long Maturity U.S. TIPS Index Fund

While today’s offering is an index fund, Pimco has said it hopes to also launch actively managed ETFs. According to Dow Jones, the world’s largest fixed-income manager hopes to use its bond-market acumen to design funds that are easier than other ETFs for market makers to traffic in, potentially lowering costs for regular investors. Barclays Global Investors’ iShare hold most of the assets in ETF bond funds with $72 billion.

The iShares Barclays 1-3 Year Treasury Bond ETF (SHY), with $7 billion in assets and an expense ratio of 0.15% will be the largest direct competitor for TUZ.

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