Two Eras Dawn
February 24, 2012
This week, the age of the actively managed exchange-traded fund officially debuts.
That's because the star of (actively managed) mutual funds is getting into the game: Bill Gross of Pacific Investment Management Company.
His Total Return Fund has $250 billion-plus in assets. Now, he wants to replicate that for PIMCO in the exchange-traded fund field, where total assets of all ETFs has just gone past $1 trillion.
Good luck. ETFs are hot. They're becoming the intraday instrument of choice for many institutions, accounting for roughly one-third of all trading on the New York Stock Exchange now.
But most ETFs are passively managed, tied to indices. There's only $5.2 billion in all varieties of actively managed ETFs, at this point. That's equivalent to 2% of Gross' Total Return mutual fund.
So there's plenty of room to run. More than $11 trillion is held in mutual funds, for comparison (See "Time Will Tell Worth of Actively Managed ETFs," page 1).
But be careful, fund managers and developers. The big issue, long term, is whether exchange-traded funds-because they have so many flavors and can be sold the same day they are bought-are being used for trading, according to Kenneth J. Taubes, executive vice president and chief investment officer for US Pioneer Investments.
Not for investing.
Another fund era dawns as well this week.
Keeping tabs for you going forward on the changes and challenges in the mutual fund and exchange-traded fund businesses will be Hung Tran.
Hung is the new editor of Money Management Executive. He arrives here at 1 State Street Plaza in New York from InvestmentWires, where he reported on mutual funds and 401(k) plans.
He also has been a reporter or researcher for FINalternatives, MARHedge, Mergermarket and, here, at Buyouts newsletter, when owned by Thomson Financial.
He's an always-on editor and reporter. And you'll see evidence of that every hour of every day online and in print, at Money Management Executive and mmexecutive.com.
Hung can be reached at firstname.lastname@example.org.