It is news because of the name behind the fund, but it can
hardly be considered surprising news that the PIMCO Total Return
), also known as the "Bill Gross ETF," has topped $3 billion in
assets under management.
Under any circumstances, $3 billion in assets under management
is quite a feat. Doing it in
seven months as an actively managed ETF
as BOND has done is arguably more impressive.
Adding to the superlatives is the fact BOND, the most widely
anticipated ETF to come to market in 2012, has backed up the hype
by delivering returns of 7.3 percent since its debut. BOND, the
ETF equivalent of the $278 billion Total Return Mutual Fund, the
world's largest mutual fund, charges a 0.55 percent. That is
another feather in BOND's cap as that expense ratio is reasonable
among actively managed products.
All these things are nice and investors must acknowledge these
factors, but as analysts and the financial media have been busy
heaping praise on BOND, it appears no one has stopped and asked
the question: Is any of this surprising?
The answer is "No." What would have been news is if BOND
flopped. Simply put, Bill Gross is one of the best bond managers
of all-time. When it comes to brand recognition in his field,
Gross is the Coca-Cola (NYSE:
) or Apple (NASDAQ:
). Said another way, the success of BOND is about as surprising
as saying it is hot in Phoenix in July or that it is cold in
Detroit in February.
All that should be common sense, but few have been willing to
some other bond ETFs
have delivered returns well in excess of BOND's. Others have been
quite proficient at raking in assets.
Combine BOND's brand recognition with its asset-gathering
acumen, and it is easy to see why some other bond ETF stories
worth telling have largely been ignored. That does not make it
Take the case of the WisdomTree Emerging Markets Corporate
Bond Fund (NASDAQ:
). EMCB is eight months old and has almost $71.4 million in AUM.
In most instances, that is not bad for eight months of work, but
compared to BOND, $71.4 million does not sound like much.
There are a few things worth noting about EMCB. First, it is
clear this is a
new ETF that will not only survive, but thrive as
. Second, this was the first ETF to focus entirely on emerging
markets corporate debt. Third, EMCB is actively managed, just
Investors willing to pay just five more basis points in fees
with EMCB get a 30-day SEC yield that is more than 150 basis
points better than BOND's. Over the past 90 days, EMCB has topped
BOND by more than 200 points in terms of performance.
Another "while the bond ETF experts were sleeping" example is
the PowerShares Senior Loan Portfolio (NYSE:
). As is the case with EMCB, BKLN is a niche bond fund with a
deep first-to-market advantage.
The fund has $1 billion in AUM, which, again, does not sound
like much compared to BOND, but consider the following. BKLN does
not have Bill Gross behind, but its asset growth has been nothing
short of impressive. BKLN had less than
$600 million in AUM as of early July
. The $1 billion mark was eclipsed on Monday, meaning the ETF
raked in $120 million in cash over the past two weeks because it
had $880 million in assets on September 24.
All that with a 4.6 percent year-to-date gain, a 30-day SEC
yield of 4.4 percent and a monthly dividend.
Another bond fund not getting the praise it deserves is the
iShares Emerging Markets Local Currency Bond Fund (NYSE:
). LEMB will celebrate its first anniversary next week, but the
fund has $103 million in AUM.
ETFs tracking emerging markets sovereign debt denominated both
in U.S. dollars and local currencies have proven alluring to
investors this year, primarily due to robust yields. LEMB is up
4.5 percent year-to-date and has a 30-day SEC yield of 4.1
LEMB charges 0.6 percent. Investors looking to save a few
bucks in expenses without sacrificing local currency bond
exposure should consider the WisdomTree Emerging Markets Local
Debt Fund (NYSE:
). ELD charges 0.55 percent per year. ELD is the answer to an
interesting trivia question. That being "What was the first
actively managed ETF to top $1 billion in AUM?"
For more on bond ETFs, click
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