Pimco, Global X launch ETFs

With The Vanguard Group Inc. on its heels, Pacific Investment Management Co. LLC today launched new actively managed exchange-traded funds.
DEC 02, 2009
With The Vanguard Group Inc. on its heels, Pacific Investment Management Co. LLC today launched new actively managed exchange-traded funds. Pimco’s second actively managed ETF, the Intermediate Municipal Bond Strategy Fund (MUNI), will invest primarily in high-quality, intermediate-maturity, AMT-free municipal bonds whose income is exempt from federal and, in some cases, state, taxes. “The U.S. fiscal outlook will likely include higher marginal tax rates in the years to come, raising the need for tax-efficient investments,” John Cummings, executive vice president and head of Pimco’s municipal bond desk, said in a statement. “At the same time, however, municipalities and states face a host of challenges in managing their budgets, so the importance of credit analysis is heightened.” Pimco launched its first actively managed ETF — the Pimco Enhanced Short Maturity Strategy Fund (MINT) — Nov. 17. Meanwhile, Vanguard last week filed papers with the Securities and Exchange Commission that would allow it to come out with its first actively managed ETF. In a revised prospectus filed Friday, Vanguard proposed a fully transparent actively managed ETF that would exist as a share class of the Vanguard Inflation-Protected Securities Fund (VIPSX). Vanguard first filed papers to offer the ETF in February 2007, but at the time proposed revealing only a portion of the portfolio. Partial transparency, however, may have been too much of a stumbling block. The SEC continues to insist that ETFs provide investors with transparency equal to that of stocks. Separately, ETF newcomer Global X Management Co. LLC today launched two offerings designed, respectively, to track China’s consumer and industrial sectors. The Global X China Consumer ETF (CHIQ) seeks to replicate the S-BOX China Consumer Index, which is designed to reflect the performance of the nation’s consumer sector. As of Oct. 30, the largest stocks in the index were food-and-beverage companies Tingyi and Want Want China, automobile company Dongfeng Motor Group, department store company Parkson Retail Group and sports apparel company Li Ning. The Global X China Industrials ETF (CHII) seeks to replicate the S-BOX China Industrials Index, which is designed to reflect the performance of the nation’s industrial sector. As of Oct. 30, the largest stocks in the index were diversified industrial manufacturer BYD Co., infrastructure groups China Communications Construction and China Railway Group, industrial shipping and logistics services company China COSCO Holdings, and building materials firm China National Building Material Group. Global X plans to launch more ETFs focused on China, including the China Energy ETF (CHIE), China Financials ETF (CHIX), China Materials ETF (CHIM), and China Technology ETF (CHIN).

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