Bill Gross ETF Lagging These Bond Funds (HYD, ELD, TRXT)
Being a contrarian is hard. Some folks don't listen to facts and theories that run counter to what is comfortable and popular. And let's be honest. Not everyone that acknowledges contrarian thinking embraces it.
So it can be lonely being a contrarian and that's exactly how we feel when we discuss one new ETF. Hey, we're fair. We recently noted that in just a week of trading, the Bill Gross-run Pimco Total Return ETF (NYSE: TRXT) had attracted $135 million in assets under management. At the close of markets on March 15, the total had surged to over $184 million.
That's nothing short of impressive and speaks to the power of the Bill Gross name. Well, popularity is useful in high school and it's good for attracting assets, but there is no empirical evidence to suggest a security's homecoming king status leads to better returns.
With that, there are at least four under-the-radar bond ETFs that have outperformed the Pimco Total Return ETF since its debut. They are as follows.
Market Vectors High-Yield Muni ETF (NYSE: HYD) If the Market Vectors High-Yield Muni ETF can halt its Friday slide at 1.1% and TRXT stays in its current intraday range, the muni bond fund will still be outperforming the Gross fund when the market closes today. Impressive considering the recent batch of controversy surrounding muni bonds. In addition to recent performance, there are other factors that bolster the case for HYD over TRXT. HYD has an expense ratio of 0.35%, 20 basis points cheaper than the Pimco fund, and has a 12-month yield of 5.43%.
Market Vectors LatAm Aggregate Bond ETF (NYSE: BONO) You don't have to believe the news today, but closing your eyes won't make the facts go away and the fact is the Market Vectors LatAm Aggregate Bond ETF, which we love because it allows for U2 puns, has outperformed TRXT. We should mention BONO, which is 10 months old, has low volume and just $7.6 million in AUM, but that may be a product of almost half the ETF's holding either being unrated or non-investment grade.
Should countries like Brazil, Colombia, etc. see their sovereign ratings boosted, BONO will benefit. Oh yeah, BONO is cheaper than TRXT, too.
PowerShares Convertible Securities ETF (NYSE: CVRT) CVRT is certainly more speculative than TRXT as the PowerShares fund tracks dollar-denominated investment grade and non-investment grade convertible securities. This unheralded ETF is up about 4% year-to-date and holds convertible issues from a bunch of familiar companies such as General Motors (NYSE: GM) and Wells Fargo (NYSE: WFC) just to name a pair. CVRT also checks in at 20 basis points cheaper than TRXT.
WisdomTree Emerging Markets Local Debt ETF (NYSE: ELD) We're not surprised ELD has outperformed TRXT. What's surprising is that when folks criticize actively managed ETFs, criticism that's warranted, they forget about the success of ELD. This actively managed ETF is less than two years old and has over $1.2 billion in AUM.
ELD yields over 4%, has options available and features issues from Brazil, Chile, Colombia, Mexico, Peru, Poland, Turkey, South Africa, Russia, Malaysia, Indonesia, Philippines, Thailand, China, and South Korea.
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