Pacific Investment Management Co., or PIMCO, is embarking in the ETF market.
Its new exchange-traded fund is set to follow the Lehman Brothers U.S. Aggregate Index, a popular ETF benchmark already used by Barclays, Vanguard Group and State Street Corp. This move is significant because it shows that big mutual funds, like PIMCO, are recognizing customers increasing interest in the $578 billion market.
Because ETFs track benchmarks, which minimize the role of fund managers, many mutual fund managers see them as less profitable then actively managed funds. American Funds and T. Rowe Price Group Inc., for instance, dont offer ETFs, and Fidelity only offers one.
PIMCO did not release a date when its ETF would enter the market but it typically takes at least six months to get approval from the Securities and Exchange Commission.