PIMCO and Source’s flagship PIMCO Short-Term High Yield Corporate Bond Index Source ETF, managed by PIMCO, is now available in a EUR-hedged version.
The existing USD share class has already grown to USD550m since its launch in March 2012, driven by the product’s high yield per unit of duration and appealing current yield.
The PIMCO Short-Term High Yield Corporate Bond Index Source ETF aims to provide the performance of the BofA Merrill Lynch 0-5 Year US High Yield Constrained Index, a broad benchmark of over 800 USD-denominated corporate bonds. The ETF is physically invested in bonds and is managed by PIMCO, benefiting from PIMCO’s experience in smart passive index replication and credit filtering. The EUR-hedged share class aims to provide euro-based investors the same underlying fund exposure while minimising the effects of exchange rate fluctuations between the US dollar and euro.
“Short term high yield is a segment of the market which continues to resonate with investors, combining low interest rate risk with enhanced yields,” says Howard Chan, ETF product manager at PIMCO, EMEA. “Since launch, we believe that this ETF has delivered both a high level of yield and lower volatility compared to other products in the broad high yield sector.”
“Our short-term high yield ETF has clearly struck a chord with yield-seeking investors,” adds Source chief executive Ted Hood. “However, not everyone wants the USD exposure. In response to strong client demand, we are happy to be launching a EUR-hedged share class and further broadening the appeal of PIMCO Source ETFs.”
The PIMCO Short-Term High Yield Corporate Bond Index Source ETF is traded on the London Stock Exchange. Management fees are 0.60 per cent p.a. for the EUR-hedged share class and 0.55 per cent p.a. for the USD share class.