Date Launched: Nov 16, 2009
Links: Website, Factsheet, Prospectus
Investment Strategy:
(MINT: 100.2599 0.00%) investment objective is to seek maximum current income alongside preservation of capital and daily liquidity. MINT is an actively-managed bond ETF that looks to provide greater income and total return than conventional money market funds. It will invest at least 65% of the fund (under normal circumstances) in short duration, investment grade debt and the average duration of the portfolio will not exceed 1 year. MINT will also not utilize any options, futures or swaps, but may invest in forwards. The fund may invest in securities issued by US or foreign issuers. MINT’s strategies are driven by top-down approaches involving financial and economic outlooks as well as bottom-up approaches involving the identification of undervalued securities. The fund is benchmarked against the Citigroup 3-month Treasury Bill Index.
Portfolio Managers:
PIMCO serves as the investment manager of MINT. PIMCO has more than $940 billion in assets under management as of Sep 30, 2009 and over $75 billion in only short duration strategies.
Jerome Schneider – Executive Vice President at PIMCO, joined PIMCO in 2008 after serving as Senior Managing Director with Bear Stearns where he specialized in credit and mortgage-related funding transactions.
Past Performance –
1. A comparative fund managed by PIMCO is the PIMCO Low Duration Fund, run by Bill Gross himself which also invests in short-term investment grade bonds but has a slightly longer average duration. This fund has outperformed its benchmark in nearly all periods, 1-yr, 3-yr, 10-yr and since inception.
The Numbers:
Expense Ratio – Capped at 0.35% till Oct 31, 2010 (by contractual agreement), 0.39% after that.
Average Volume – 27,593 shares
What’s special about it?
1. MINT stands tall as the largest Active ETF at the moment with a market cap of around $115 million even though it’s only been slightly more than 2 months since its launch.
2. Comparing it to its counterpart, PLK – the PowerShares Active Low Duration, MINT’s holdings are quite a lot more conservative. The average duration of securities is restricted to less than 1 year while PLK can get up to 3 years. MINT is restricted to investment grade securities while PLK can invest up to 25% of funds in non-investment grade debt. And MINT does not use options, futures or swaps, while PLK is allowed to use all of those.
3. MINT may invest up to 15% of its assets in “illiquid securities” which are defined as securities that can’t be disposed off in 7 days. The fund may also invest up to 5% in securities and instruments that are tied to emerging market economies. It can also put up to 5% of the fund in mortgage-related or asset-backed securities.
Analysis:
Positives –
- The PIMCO name brings with it a reputation that is hard to ignore, which is why MINT has grown in size so much more quickly to its current market cap of around $115 million than other Active ETFs. With $75 billion in short duration strategies already being managed by PIMCO, they have a solid track record and MINT provides access to their proven investment process and cash management expertise.
- While still not comparable to traditional index ETFs, MINT has much higher traded volumes than other Active ETFs, giving it the liquidity that is severely lacking in other competitors’ offerings.
Negatives –
- MINT does have a higher expense ratio of 0.35% compared to its counterpart, PLK, which has an expense ratio of 0.30%, but that might be the price investors are expected to pay for the reputation that PIMCO has in the fixed-income space.
Performance to Date, relative to the SPDR Barclays Capital 1-3 Month T-Bill ETF (BIL), a close comparison to the Citigroup 3-month Treasury Bill Index:
Disclosure: No positions in above-mentioned names.
