With Gross, Pimco adds star power to ETFs

Pacific Investment Management Co. LLC has added bond guru Bill Gross as a co-manager to its three upcoming actively managed exchange-traded funds. He was added as a co-manager to the soon-to-be-launched Pimco Real Return, Diversified Income and Low-Duration ETFs in an updated filing with the Securities and Exchange Commission last week. Pimco filed the initial paperwork for the trio of ETFs in June without Mr. Gross' name attached to any of them. The three ETFs are similar to mutual funds that Pimco already offers, one of which he manages. Mr. Gross isn't a listed manager on the $24 billion Pimco Real Return Fund (PRTNX) or the $7.2 billion Pimco Diversified Income Fund (PDVAX). Those are managed by Mirah Worah and Curtis Mewbourne, respectively. Both will co-manage their respective strategies with Mr. Gross, but his addition isn't expected to change the strategies, said Tim Strauts, ETF analyst at Morningstar Inc. “It could help the products to have Bill Gross as a portfolio manager, but I don't think it really affects how the ETFs will be run,” he said. Mr. Gross is the portfolio manager of the $24.6 billion Pimco Low Duration Fund (PTLAX). He will be joined by Marc Seidner on the ETF version. Each of the three ETFs will be cheaper than the retail shares of their respective mutual fund counterparts but more expensive than the institutional share classes, similar to the pricing strategy of the $5 billion Pimco Total Return ETF (BOND). “They think they've found the sweet spot for ETF pricing,” Mr. Strauts said. Even though the ETFs will be run by the same management teams as the funds, don't expect the performance of the two to be similar. As the Pimco Total Return ETF has shown, the same manager doesn't mean the same results. The ETF version of Pimco's flagship total-return strategy, managed by Mr. Gross, had a return of 10.5% over the 12-month period through April 19. The mutual fund version had a return of 7.13% over the same period. jkephart@investmentnews.com Twitter: @jasonkephart