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Gross’s ETF Soars to $3 Billion Outperforming Mutual Fund

Bill Gross’s Total Return Exchange- Traded Fund (BOND) reached $3 billion in assets in about seven months as it outperformed the world’s largest mutual fund, which follows a similar strategy.

Pimco Total Return ETF, which started trading on the NYSE Arca exchange on March 1, had $3.01 billion in net assets as of yesterday’s close, according to Pacific Investment Management Co.’s website. The fund has advanced 10.4 percent since inception through yesterday’s close, compared with the 6.5 percent return for Gross’s $278 billion Total Return Fund, according to data compiled by Bloomberg.

The ETF’s performance edge narrowed in the last three months, with a return of 3.1 percent compared with 2.8 percent for Gross’s mutual fund. In its first four months, the ETF gained 6.3 percent, more than twice as much as the mutual fund. Gross’s ETF reached $1 billion in net assets in May and $2 billion in July.

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Pimco Total Return Fund (PTTRX), while trailing its ETF version, is beating 97 percent of similarly managed mutual funds this year and 98 percent over five years, according to data compiled by Bloomberg. Gross, co-chief investment officer of Newport Beach, California-based Pimco, has bounced back from what he termed “a stinker” of a year in 2011, when he trailed 70 percent of peers.

Pimco Total Return ETF, designed to blend the trading flexibility and accessibility of ETFs with Gross’s bond-picking ability, is a test case for investor interest in active ETFs. In April, Pimco began an actively managed ETF that invests in global inflation-linked government bonds denominated in local currencies, bringing the total number of actively run ETFs at Pimco to six. Its Enhanced Short Maturity Strategy Fund has more than $2 billion in assets.

ETFs typically hold baskets of securities, while trading throughout the day like stocks.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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