PIMCO has launched a European ETF that combines exposure to US large-cap equities with an actively managed bond portfolio.
The PIMCO Advantage StocksPLUS US Large Cap UCITS ETF aims to outperform the S&P 500 by adding returns generated through PIMCO’s fixed-income investment process.
Rather than attempting to beat the index through stock selection, the strategy combines broad US equity exposure with an actively managed portfolio of bonds. This means its additional returns should primarily depend on PIMCO’s ability to identify opportunities across fixed-income markets.
The StocksPLUS strategy was first developed in 1986, although this is the first time it has been offered through a European UCITS ETF.
The ETF began trading on 24 July under the ticker SPLU on the London Stock Exchange, Borsa Italiana and SIX, and as 5PSU on Deutsche Börse. It is an ETF share class of the existing PIMCO GIS StocksPLUS Fund.
Tina Adatia, PIMCO’s head of product strategy for EMEA and Asia Pacific, said the launch gave investors greater choice in how they accessed the firm’s established investment strategies.
PIMCO’s European ETF platform now manages $8.9bn across 12 strategies, covering areas including short-term bonds, investment-grade credit, high yield, emerging markets and US equities.
Our view
David Batchelor, senior analyst at QuotedData, said: “The ETF offers a different approach to active US equity investing. Rather than asking a manager to identify which S&P 500 companies will outperform, it accepts broad market exposure and attempts to generate additional returns through bonds.
However, investors should not view it as a defensive equity-and-bond portfolio. The strategy retains its US equity exposure while adding fixed-income and derivatives risks on top. Its success will therefore depend on whether PIMCO can generate enough additional return to overcome the fund’s costs and any drag from implementing the strategy.
