Pimco launches active short-dated corporate bond ETFs

Pimco has launched two actively managed short-dated investment grade corporate bond ETFs in partnership with Source.

The London-listed, Dublin-domiciled ETFs offer “consistent” credit expertise with inherent protection from rising interest rates, Pimco says.

The Pimco Low Duration US Corporate Bond Source Ucits ETF will invest in dollar-denominated debt, while the Pimco Low Duration Euro Corporate Bond Source Ucits ETF will buy just euro bonds.

Bonds will have a maturity of less than five years, and the duration will be kept between zero and four years.

Pimco says the new funds are aimed at those worried about rising interest rates.

Pimco credit chief investment officer Mark Kiesel says there are many bottom-up opportunities in the corporate bond market.

“Particularly in industries with pricing power and compelling growth prospects with high barriers to entry,” he explains.

The two different ETFs allow investors the option to make their own asset allocation and currency exposure decisions, he adds.

Pimco European Credit portfolio manager Andreas Berndt explains the company is optimistic about the European market.

“The short-dated segment of the Euro corporate bond market has a higher weight to the banking sector and we favour European banks.

“They will be the main beneficiaries of the accommodative monetary policies such as the ECB targeted long-term refinancing operations.” 

The two funds have an AMC of annual management fee of 0.49 per cent, that is being discounted to 39 basis points for the first 12 months.

Pimco launched the first actively managed ETFs in Europe three years ago with the help of Source.

Since then the range has gathered $5.3bn.