The first two fixed income ETFs from the Pimco Source partnership have been launched on the Deutsche Boerse's Xetra platform.
The Pimco Euro Enhanced Short Maturity Source ETF and Pimco European Advantage Government Bond Index Source ETF, both physically replicated, have expense ratios of 0.35% and 0.30% respectively.
Pimco Source announced their collaboration in fixed income ETFs in December, citing demand for "more than the traditional benchmark exposure" in a broad and complex asset class.
Source CEO Ted Hood said at the time: "The credit crunch proved that every fixed income portfolio needs a mix of skilled product engineering and experienced active management."
The firms' Euro Enhanced ETF is an actively managed fund investing in eurozone government and corporate bonds, as well as other asset-backed securities. The fund seeks to outperform the money market, taking the EONIA - an overnight interest rate calculated on an average of all unsecured interbank lending - as a benchmark.
Pimco managing director Tammie Arnold explains: "The Pimco EUR Enhanced Short Maturity Souce ETF is designed for investors who hold cash balances and are looking to achieve enhanced cash returns while remaining focused on capital preservation and liquidity."
The European Advantage ETF has a more traditional structure, tracking the Pimco European Advantage Government Bond index. The index is unique in using a GDP-weighted methodology designed to avoid the bias of the conventional market capitalization approach, which can cause fixed income indices to overweight highly indebted countries.
Hood says of the launch: "The new Pimco Source ETFs have been developed to respond to challenges posed by current market conditions and to capture fixed income opportunities to arise."
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