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New High Yield Listing For Pimco-Source Team
By Staff | 19 March, 2012

Source and Pimco have launched another joint ETF in what they call the ‘smart passive’ range, this time focusing on high yield bonds with short maturities.

The Pimco Short-Term High Yield Corporate Bond Index Source ETF tracks the Bank of America Merrill Lynch 0-5 Year US High Yield Constrained Index, which is made up of bonds from over 800 securities with maturities ranging from zero to five years.

Demand for fixed income ETFs has been growing and a BlackRock report last month revealed that fixed income products, particularly high yield funds, enjoyed record demand in January.

Ted Hood, CEO of Source said: “Investors told us they were looking for opportunities to invest in high yield but wanted a ‘smarter’ ETF to deliver access to the short maturity sector whilst at the same time aiming to deliver efficient tracking and improved portfolio management.”

According to the issuers, investors are attracted to the short-term end of the high yield sector because it provides returns in line with equities, but with lower volatility.

Vineer Bhansali, managing director at Pimco and portfolio manager of the new ETF, said: “Returns on a diversified basket of high yield bonds tend to be less volatile than equities over a long holding horizon because the income component of the return is typically larger than that of equities, providing an added measure of stability.”

The new ETF uses physical replication and has a total expense ratio of 0.55 percent. It is listed on the London Stock Exchange.


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