Market Overview

Bill Gross ETF Off to Fine Start (TRXT, TIP)


Admittedly, we weren't throwing any parties right before or right after the Pimco Total Return ETF (NYSE: TRXT) debuted on March 1. That put us in a small minority of folks that really weren't all that excited to see an ETF answer to the world's largest mutual fund.

Well, in the essence of fairness, we should point out that in a mere five trading days, the Pimco Total Return ETF has raked in almost $135 million, according to the Pimco ETF Web site. It should also be noted the Pimco Total Return ETF has averaged almost 296,000 shares per day in turnover since its debut. Again, impressive.

Rounding TRXT's AUM up to $135 million, it's currently a tad less, and dividing by five trading days means the new Pimco fund is pulling in an average of $27 million per day in assets. No doubt, that's stellar, but that pace probably won't last forever and that's not a knock on TRXT. It's just reality in the world of new ETFs.

Some skepticism is warranted. Total Return in ETF form is cheaper than it is in mutual fund form and that begs the question "How much of TRXT's $135 million in AUM came courtesy of investors redeeming shares of the mutual fund and using the proceeds to buy TRXT?" Fair question because under that scenario, Pimco isn't gaining assets. It's actually losing basis points on management fees.

And we just couldn't resist trying to figure out how long it could take TRXT to become the world's largest bond ETF, an honor that currently belongs to the iShares Barclays TIPS Bond ETF (NYSE: TIP).

Rounding up slightly, the iShares Barclays TIPS Bond ETF had $23 billion in AUM at the end of February, according to ETF Industry Association data. Assuming TIP attracts no more assets and TRXT stays on the $27 million per day plan, it will be approximately 851 days and 20 hours before TRXT becomes the largest bond ETF.

Posted-In: Long Ideas News Bonds Short Ideas Specialty ETFs New ETFs Intraday Update Markets


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