Recently, PIMCO and renowned bond fund manager Bill Gross filed for registration to list an exchange traded fund (ETF) version of their highly popular PIMCO Total Return Fund. This is just the latest example of active mutual fund managers attempting to move into the mushrooming ETF space. Previously, active mutual fund managers have been reluctant to offer ETFs because of the daily disclosure requirements. Unlike mutual funds, which are only required to disclose holdings on a quarterly basis (and 60 days in arrears at that), ETFs are required to disclosure their holdings daily – so investors always know exactly what they own.
As investors demand more transparency in their investments, mutual fund managers are realizing that they can either watch assets flow out of their mutual funds or operate their fund transparently via an ETF. Give credit to PIMCO and Bill Gross for having the confidence to open the curtain on their most popular mutual fund and allow investors the opportunity to invest with greater transparency. As Dave Nadig of IndexUniverse points out in the article, this move by PIMCO “puts the nail in the coffin for active managers who need to hide in the world of non-disclosure and poor transparency”.
