Date Launched: Nov 16, 2009
Links: Website, Factsheet, Prospectus
Investment Strategy:
(MINT: 100.78 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.
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[...] assets managed by Active ETFs in the US are only about $225 million, with half of those coming from PIMCO’s Enhanced Short Maturity Fund (MINT: 100.19 -0.04%) alone. But if you speak to the issuers, most are not surprised or [...]
[...] assets managed by Active ETFs in the US are only about $225 million, with half of those coming from PIMCO’s Enhanced Short Maturity Fund (MINT: 100.19 -0.04%) alone. But if you speak to the issuers, most are not surprised or [...]
There really is no way to know how much of Pimco's AUM in the ETF space derives from truly new investments, how much is just cannibalization of their own products (at a lower fee!), and how much is their own seed money.
Zucker,
Thanks for your comment. It's hard to disagree with your point, agreed that any new product launched in the same industry will lead to some cannibalization..and this is something common across industries. When the iPhone 3GS was released, I'm sure it cannibalized sales of the older iPhone 3G.
But something that can help add some perspective is that if the total size of that market is increasing, then a large portion of the increases in the new product class could well be coming from new customers.
I am thrilled and excited at finding a site dedicated exclusively to exploring the substance and form of active etfs. After being in the investment business for 20+ years I think many of your readers are hype sensitive to every wrinkle and wiggle in the etf world. I am not so sure that your average investor has reached the point of understanding long-established passive etfs, let alone the nascent active etf. It will be some time before we will witness a similar trajector for this exciting development.
Thanks for your comment, tudelson – glad to share your excitement.
Yes I would agree with you, as is the case with any new innovation and development, it takes time for adoption to become widespread. Index ETFs have taken a decade to get to where they are now. For Active ETFs though, I feel the route might be slightly shorter. When index ETFs first came out, indexing was a new concept and it took time to gain traction. Active management though, as practiced by Active ETFs, has been around for a much longer time. It's actually more of a “back to square one”, with only active management dominating first, then indexing gaining significance through ETFs and now we're back to active management, only this time through ETFs instead of mutual funds.
That's why I feel it might be a quicker adoption this time around.
[...] moment, despite the fact that they only have 3 listed Active ETFs. In fact, of those 3 products, PIMCO’s Enhanced Short Maturity ETF (MINT: 100.24 +0.01%) accounts for more than 80% of the $167 million in total assets being managed [...]
[...] PIMCO Enhanced Short Maturity [...]
[...] MINT invests at least 65% of its assets in short duration, investment grade debt and the average duration of the portfolio will not exceed 1 year. This ETF provides access to PIMCO’s fixed-income strategies which 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 and carries an expense ratio of 0.35%. MINT is currently the largest Active ETF on the market, with a market cap of $129.35 million, thanks to the reputation that PIMCO brings as an investment manager. MINT has also beaten the 3 month T-bill benchmark since inception. Find a complete breakdown of MINT here. [...]
[...] by the SEC’s derivatives review. The biggest spike in assets this month expectedly came from PIMCO’s Enhanced Short Maturity (MINT: 100.244 +0.07%), increasing by $56.2million. MINT has been on a very strong trajectory since [...]
[...] capital inflows as the fund itself did not see much appreciation during the month. Interestingly, PIMCO’s Enhanced Short Maturity Fund (MINT: 100.339 +0.08%) lost some steam and saw outflows of close to $14million, even though it [...]
[...] volumes. The only one that has gained some level of respectability in terms of trading volumes is PIMCO’s Enhanced Short Maturity Fund (MINT: 100.40 +0.11%), trading an average of about 34,000 shares daily. Most others have languished [...]
[...] managed by Active ETFs in the US are only about $225 million, with half of those coming from PIMCO’s Enhanced Short Maturity Fund(MINT: 100.19 -0.04%) alone. But if you speak to the issuers, most are not surprised or [...]
[...] ETF which it filed for in March, 2010. Both these products are following in the footsteps of PIMCO’s Enhanced Short Maturity (MINT: 100.2741 +0.02%) ETF which has grown by leaps and is easily the largest Active ETF in the US [...]
[...] and the 3 PIMCO Active ETFs. The standout in that group this past month has no doubt been the PIMCO Enhanced Short Maturity (MINT: 100.1252 -0.02%) fund, which has clearly benefited from the flight to safety that we have [...]
[...] has been behind this quadrupling of assets in the largest actively-managed ETF on the market – PIMCO’s Enhanced Short Maturity (MINT: 100.18 0.00%)? Just based on the back of MINT, the month of May saw the entire Active ETF [...]
[...] manager in a sector where it would be most useful in avoiding pitfalls. For example, PIMCO’s Enhanced Short Maturity Fund (MINT: 100.55 0.00%), which is the 2nd largest fund in the Active ETF space, operates in the [...]