It looks like you're new here. If you want to get involved, click one of these buttons!
Liquidity is always challenging for institutional bond buyers outside of Treasuries and the largest corporate debt issuers. “When I look at what’s going on in the ETF space in terms of very illiquid investments making their way into daily liquid ETFs”—collateralized loan obligations, complex option strategies, private investments—“I’m concerned,” says Daniel Ivascyn, manager of the $188 billion Pimco Income mutual fund.
He also manages the $6 billion Pimco Multisector Bond Active ETF, though he stresses that the mutual fund “is a highly flexible strategy, very tactical, very active.” The ETF’s strategy is longer-term-oriented. Its expense ratio of 0.55% is lower than the 0.90% charged by the mutual fund’s retail A-share class.
Ivascyn’s team has long profited from its bets on securitized mortgage and consumer debt—home, auto, and credit-card loans bundled as tradable securities. The ETF has a 40% weighting in such debt, according to Morningstar. “We know that government balance sheets have weakened considerably [since the 2008-09 crash], and corporate balance sheets have deteriorated,” he says. “But the consumer balance sheet has only improved.”
There are other sectors worth exploring today, Ivascyn says, especially overseas, where investors can find not only better yields but also cheap currencies relative to the dollar. Although he thinks the road will be bumpy, over the next five years, he says, “one of our highest conviction views would be dollar weakness.”
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
Comments
https://www.msn.com/en-us/money/savingandinvesting/why-these-active-bond-funds-are-worth-a-premium/ar-AA1ILkpG
I
Googlesearch for the article's title (verbatim) and usually find it on MSN.You're correct—tables from a Barron's article are often missing from the corresponding MSN article.