Gross doesn't advise investors about whether they should choose the no-loads over Pimco Total Return.
Fund managers are copying the success of Bill Gross and the Pimco Total Return fund, which uses leverage.
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And the Pimco Total Return ETF will put that juice to the test.
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But no investors will be more challenged than those with billions already managed by Bill Gross in the Pimco Total Return Fund.
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And some of the newer bond ETFs (like PIMCO Total Return ETF, BOND) show signs of being real competitors for bond funds down the road.
The launch of the Pimco Total Return Exchange-Traded Fund will test the mettle of investors with trillions of dollars invested in traditional bond mutual funds.
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The PIMCO Total Return Exchange-Traded Fund (BOND) is a diversified portfolio of high quality bonds that is actively managed in an effort to maximize return in a risk-controlled framework.
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Returns so far this year for the Pimco Total Return fund were 1.37% as of May 15, putting it in the bottom 14% of comparable funds for the period, according to Morningstar.
We also continue to own some traditional bonds funds, such as PIMCO Total Return Fund, in addition to other income-oriented investment vehicles such as the Nuveen High Yield Bond Fund, which yields more than 7%.
With the initial run of the Pimco Total Return ETF ( BOND), active ETFs and their managers may need to start thinking about the challenges that success could pose to the ETF structure.
And while many investment advisers traditionally wait for a 3-year track record to commit new money to an active strategy, the Pimco Total Return ETF will more likely be judged sooner by its variance to the Pimco Total Return Fund, sporting nearly a quarter-century of returns.
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Pimco was wrong, and its flagship Total Return Fund ended the year with a 4.2% return.
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But in most cases, I think I have a better chance at limiting risk (and ideally boosting returns) by sticking with open-end bond funds like DoubleLine Core Fixed Income (DLFNX), DoubleLine Total Return (DLTNX), Thompson Bond (THOPX), PIMCO Income (PONDX), and PIMCO Foreign Bond US Hedged (PFODX).
Pimco's Gross has taken a decidedly different focus than the other two in his total return fund, allocating just 2% of his holdings while emphasizing mortgages, which make up 42%, the largest chunk.
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