The Pimco Total Return ETF (NYSEArca:BOND), the
exchange-traded-fund version of Bill Gross' flagship $250 billion
mutual fund, crossed the $1 billion barrier Monday, less than three
months after it came to market amid a great deal of buzz and
expectation.
Many in the ETF industry had predicted BOND, launched March 1,
would swiftly surpass the Pimco Enhanced Short Maturity Strategy
Fund (NYSEArca:MINT) to become the biggest actively managed
U.S.-listed ETF. BOND had just over $1 billion as of May 21,
compared to $1.65 billion for MINT, according to data compiled by
IndexUniverse.
The rapid pace of asset gathering makes BOND one of the
quickest-growing ETFs ever. But to keep it all in perspective, the
SPDR Gold Shares (NYSEArca:GLD), State Street Global Advisors'
physical bullion ETF, achieved that milestone in just three short
days after its launch in November 2004, according to an official at
SSgA. GLD is now the world's second-biggest ETF, with more than $65
billion in assets.
Still, BOND is clearly this year's fastest-growing ETF, putting
it in the company of last year's most successful launches-the
PowerShares S&P 500 Low Volatility Portfolio (NYSEArca:SPLV)
and the iShares High Dividend Equity Fund (NYSEArca:HDV).
SPLV, which took about nine months to become a $1 billion ETF,
now has $1.65 billion, and HDV, which took a bit more than 10
months to reach $1 billion in assets, now has $1.47 billion. The
Vanguard S&P 500 ETF (NYSEArca:VOO) also looms largely as one
of the more successful launches in recent years. VOO came to market
in September 2010, and within six months had $1 billion. It now has
$4.18 billion.
A bigger consideration all along for BOND was whether its
success might jump-start the world of actively managed ETFs. As
things stand, active ETFs account for less than 1 percent of the
more than $1.137 billion invested in U.S.-listed exchange-traded
funds.
A More Active Future?
The percentage of active ETFs jumps to about 2 percent when
confined to just fixed-income funds and moves sharply up to around
15 percent when considering just currency-related active ETF
strategies, according to data compiled by IndexUniverse.
The catalyst for BOND's success is undoubtedly Bill Gross
himself-a money manager whose stature is just this side of Warren
Buffett's in terms of name recognition.
More broadly, many in the ETF industry say marquee names such as
Gross' or that of his firm, Pimco, will make all the difference in
the world for the success of active ETF strategies.
After all, a firm such as Bethesda, Md.-based AdvisorShares has
been prospecting for business in the active ETF space for a number
of years, and doesn't have as many assets as Pimco-or BOND or MINT,
for that matter-according to IndexUniverse's "ETF League Table" and
other data we compile.
Axel Merk, a Palo Alto, Calif.-based money manager known for its
currency-related investment strategies, said as much in a recent
interview with IndexUniverse about the importance of big names to
the future of active ETFs.
Merk, whose firm filed in March to market his flagship $600
million Merk Hard Currency Fund in an ETF wrapper, argued that the
ETF was the logical investment vehicle of the future, and the
arrival of reputed mutual fund firms with well-known strategies
would open the floodgates for actively managed ETFs.
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