Today Bill Gross launched his PIMCO Total Return ETF (NYSE Arca: TRXT), hoping his move into actively managed ETFs will be a "game changer" for a market that's failed to flourish.
Gross manages the world's largest mutual fund at $250 billion. His Total Return Bond Fund has averaged a 6.3% annualized return over the past 10 years. Now he wants to expose more investors to his fund through an actively managed ETF version.
Gross also hopes his TRXT launch will jumpstart actively managed ETFs, which so far have been a largely ignored market.
ETFs typically hold baskets of stocks while trading throughout the day. Active versions combine the skill of selecting securities with the lower fees, market trading and tax advantages of ETFs.
"Small investors don't always have access to active management with a higher yield and a higher total return," said Gross, who is co-chief investment officer at PIMCO. "We are hoping "mom and pop' can do a little bit better than the bond market at a time of historically low yields."
Can Gross and TRXT deliver on the hype?
The PIMCO Total Return ETF (TRXT)
Bill Gross' ETF will have the same investment goals as the mutual fund, but aims to attract smaller investors through some key differences.
First, it's cheaper.
PIMCO will charge 0.55 basis points for the ETF, compared to the 0.9 basis points fee for the mutual fund. That's $5.50 a year for every $1,000 invested.
Not only will it give investors a break in fees, it'll allow them to be exposed to all-star investment performance they normally couldn't afford.