Pimco, the world's biggest bond fund manager, set May 1 as the
launch date for its actively managed Pimco Global Advantage
Inflation-Linked Bond Strategy Fund (NYSEArca:ILB)-exactly two
months after the rollout of Bill Gross' Pimco Total Return ETF
ILB will, under normal circumstances, invest at least 80 percent
of its assets in inflation-linked bonds that are tied to at least
three developed and emerging market countries, according to
regulatory paperwork detailing ILB that the company first filed in
November 2010. Those countries can include the U.S., according to
The fund was trading at $50.90 per share in midday trade after
having hit a high of $53 earlier in the morning. ILB was carrying a
5-cent bid/ask spread amid total volume of roughly 30,000 shares,
according to Yahoo Finance.
The launch of ILB will mark Pimco's latest attempt to breathe
life into the world of active ETFs. Active ETF strategies make up
less than 1 percent of the nearly $1.2 trillion in ETF assets, but
by the looks of it, the Newport Beach, Calif.-based company is
making inroads toward changing that.
Interest in inflation-protected bonds has been on the upswing
amid growing concern among investors that excessive monetary
stimulus from central banks such as the Federal Reserve is creating
inflationary pressure that will rear its head before long.
BOND-the ETF version of Gross' $250 billion Total Return Fund,
the biggest mutual fund in the world-has gathered more than $660
million in less than eight weeks, according to data compiled by
IndexUniverse, a successful beginning by any measure.
Also, the Pimco Enhanced Short Maturity Strategy Fund
(NYSEArca:MINT), a money-marketlike ETF, has $1.57 billion in
assets, making it the biggest active ETF to date. The WisdomTree
Emerging Markets Local Debt Fund (NYSEArca:ELD) comes in a close
second, with $1.26 billion in assets.
The iShares Barclays TIPS Bond (NYSEArca:TIP), the biggest
U.S.-listed fixed-income ETF and the eighth-biggest U.S. ETF at the
end of March, had $22.74 billion in assets as of April 23,
according to data compiled by IndexUniverse.com.
The effective duration of Pimco's new global inflation-protected
ETF will normally vary within plus or minus two years of the
effective duration of the Pimco Global Advantage Inflation-Linked
Duration is a measure used to determine the sensitivity of a
security's price to changes in interest rates. The longer a
security's duration, the more sensitive it will be to changes in
interest rates, the filing said.
The value of the bond's principal or the interest income paid is
adjusted to track changes in an official inflation measure.
ILB will have an annual expense ratio of 0.60 percent, including
an expense reimbursement, according to the latest paperwork Pimco
filed with U.S. regulators.
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