Roger Nusbaum, who runs the popular blog Random Roger, wrote in a post today that one area in which an actively-managed ETF could add some value is the financial sector. Roger makes the point that the financial sector is exactly the type where some active management would be beneficial to investors because of the number of potentially bad bets out there amongst banks. I couldn’t agree more.
PIMCO
PIMCO’s Intermediate Municipal Bond Strategy Fund (MUNI) was launched by PIMCO ETFs in Nov, 2009 as the first actively-managed ETF to focus on the $2.7 trillion municipal bond market which was then followed up by a launch from Grail Advisors called the Grail McDonnell Intermediate Municipal Bond Fund (GMMB). MUNI is managed by EVP and municipal bond desk head, John Cummings, who also manages the shorter maturity SMMU provided by PIMCO.
What has been behind this quadrupling of assets in the largest actively-managed ETF on the market – PIMCO’s Enhanced Short Maturity (MINT)? Just based on the back of MINT, the month of May saw the entire Active ETF sector in the US doubling the amount of assets under management. The Enhanced Short Maturity stood at about $773million on May 31, 2010 and just in the week that has passed, it now exceeds $800million in assets.
ActiveETFs | InFocus spoke with – Don Suskind, Head of ETF Product Management at PIMCO. PIMCO currently manages more than $200million in assets within Active ETFs and it’s the largest player in the United States Active ETF space. Don talks to us about PIMCO’s move into Active ETFs, how PIMCO plans to handle competition from other new entrants and whether there is scope for Active ETFs in Asia.
On Feb 18, 2010, the US Fed announced an increase in the short-term discount rate from 0.25% to 0.75%. This is likely just the first of many more gradual increases in interest rates implemented by the Fed as the year unfolds. So what options to investors have when looking to stash away their cash?
With a widespread freefall in tax revenues received by US states in 2008 and 2009, investors have realized that it was a matter of when and not if taxes were going to increase. Take a detailed look at 3 actively-managed ETFs that provide a way around higher taxes by investing in municipal bonds, while avoiding weak issuers.
MINT’s 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’s 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.
MUNI is an Active ETF that is intended for investors looking for tax-exempt income. It invests at least 80% of its assets (under normal conditions) in intermediate duration, high quality municipal bonds which provide interest income that is free from federal and sometimes state tax. The fund can only invest in US dollar, investment-grade bonds which are selected for the fund through research done on the credit quality of the issuing municipalities with an effort to avoid weak issuers.
