Pimco plans to launch currency ETF

New offering isn't a clone of an existing fund; some wonder about lack of manager star power

Feb 11, 2013 @ 10:22 am

By Jason Kephart

Pacific Investment Management Co. LLC tomorrow will launch an actively managed currency exchange-traded fund.

It will be the bond giant's first ETF launch since the Pimco Total Return ETF (BOND) bucked the trend of actively managed ETFs' being met with yawns by investors.

The Pimco Total Return ETF has grown to more than $4 billion in assets since its launch last March. That accounted for about 80% of the growth in actively managed ETFs last year.

The Total Return ETF benefited from the star power and track record of portfolio manager Bill Gross.

Unlike that ETF, the Pimco Foreign Currency Strategy ETF (FORX) isn't a clone of an existing Pimco fund. It will be managed by Scott Mather, Vineer Bhansali and Thomas Kressin.

Adding a currency strategy to a portfolio will help investors maintain their purchasing power as the dollar comes under pressure from the easy monetary policy in the U.S., Mr. Mather said in a statement.

“The ongoing transition away from the dollar as the pre-eminent global reserve currency is continuing, and many competing currencies increasingly offer better yields and long-term credit dynamics,” he said.

It remains to be seen whether investors will flock to an actively managed ETF that doesn't have someone such as Mr. Gross attached.

Some industry observers, however, think that a strong brand name, such as Pimco's, will be enough to get investors' attention.

McKinsey & Co. recently predicted that actively managed ETFs will grow to $500 billion, up from $10 billion, thanks to big brands' getting more involved in the space.


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