PIMCO has launched the first of three new country index exchange traded funds, the PIMCO Australia Bond Index Fund, and will soon launch the PIMCO Canada Bond Index Fund and the PIMCO Germany Bond Index Fund.
These ETFs are designed to enable investors to capitalise on opportunities within three countries whose balance sheets and debt dynamics are currently well positioned to navigate the downside effects of slower global growth and ongoing national and personal deleveraging.
Australia, Canada and Germany currently have some of the strongest balance sheets among developed nations thanks to both internal and external factors. Australia has been and remains one of the largest exporters of commodities and serves as an important trading partner with emerging markets in Asia. It’s also currently one of the higher-yielding currencies in both the developed and developing world. Canada is one of the largest exporters of agricultural products, raw materials and oil and has historically had a low debt burden, a growing economy and prudent fiscal management. Germany appears to have deftly navigated the financial crisis and is the world’s second largest exporter as well as the largest economy in Europe.
"These new index ETFs are designed to help investors access select countries that may offer better risk-adjusted returns in this New Normal environment, and benefit from PIMCO’s trading and investment expertise in local markets," says Tammie Arnold (pictured), managing director and global head of the firm’s ETF business. "With ETFs, investors may benefit from convenient access to PIMCO’s capabilities as well as the portfolio transparency and intra-day pricing attributes of the ETF vehicle."
All three ETFs offer exposure to government issued debt instruments, as well as investment-grade credit issues in Germany and Australia. The funds seek to optimise trade execution, reduce transaction costs and minimise tracking error by avoiding bonds that are hard to obtain or at high risk of near-term default, while emphasising bonds which may provide liquidity and market access.
The PIMCO Australia Bond Index Fund will trade under the ticker AUD and will be managed by Rob Mead, head of Australian portfolio management. The PIMCO Canada Bond Index Fund will trade under the ticker CAD and will be managed by Ed Devlin, head of Canadian portfolio management. The PIMCO Germany Bond Index Fund will trade under the ticker BUND and will be managed by Lorenzo Pagani, head of PIMCO’s European government bond and rates desk.