Bringing you live news and features since 2006 

European flags
European flags

PIMCO and Source launch first actively managed Covered Bond ETF

RELATED TOPICS​

PIMCO and Source have launched the PIMCO Covered Bond Source UCITS ETF (COVR), which combines the advantages of an exchange-traded fund with PIMCO’s approach to active management.

The ETF, which will be the first actively managed covered bond ETF available to investors, is managed by Kristion Mierau, senior vice president and head of PIMCO’s European covered bond portfolio management team.
 
Covered bonds have traditionally been unique to Europe, first issued in Germany and then followed by other European countries but increasingly they are being issued outside Europe.
 
“This expanding investment universe creates new opportunities for investors and fulfils their increasing demand for ‘safe assets’,” says Mierau. “In the current low interest rate environment, covered bonds offer attractive risk-adjusted yields and are potentially a compelling alternative to broad European government bonds, as the asset class has historically provided higher returns with lower volatility and lower sensitivity to changes in market yield levels.”
 
At current spread levels, covered bonds also offer investors a more attractive and secure way to gain credit exposure than unsecured senior bank debt.
 
For certain institutional investors, covered bonds offer additional advantages from a regulatory perspective. Banks benefit from the treatment of covered bonds as lower risk-weighted assets (RWA) under Basel III. Covered bonds are also considered “liquid assets” under the new Basel III liquidity regulation (LCR). Insurance companies can benefit from the privileged treatment of covered bonds under Solvency II.
 
Howard Chan, vice president and product manager for PIMCO’s European ETF products, says: “We have designed this product as a unique solution for a wide range of investors who seek access to the covered bond market, combining PIMCO’s active approach to covered bonds with the intra-day pricing and daily portfolio holdings transparency of the ETF vehicle.”
 
Source CEO Ted Hood says: “We are delighted to grow our product offering in partnership with PIMCO, adding to our successful fixed income ETF suite. PIMCO is an acknowledged expert in the covered bond market, with existing assets under management of over EUR130bn. Having over 15 years of experience, PIMCO has demonstrated their ability to add value in the asset class to outperform various market benchmarks.”
 
The PIMCO Covered Bond Source UCITS ETF is traded on Deutsche Börse and has a first year annual management fee of 0.38 per cent. Distributions are paid monthly.
 
PIMCO has partnered with Clearstream, giving investors the possibility to order shares of an ETF through Clearstream’s Vestima platform as a mutual fund with daily fixing. 

Latest News

As the ETF industry reaches a milestone of USD12.71 trillion in global assets, Brown Brothers Harriman writes that its 2024..
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin closed last week at approximately USD66,300, marking a 7.8 per..
HSBC Asset Management’s (HSBC AM) ETF and Indexing business has passed USD100 billion in assets under management (AUM), reflecting its..
Amundi’s ETF Market Flows Analysis for April reveals that investors added EUR54.1 billion to global ETFs in April with equities..

Related Articles

Dan Miller, IQ-EQ
With just over a week to go till T+1 settlement begins in North America, Canada and Mexico, time is of...
Emily Spurling, Nasdaq
Last October’s ETF Express US Awards 2023 found Nasdaq winning Best Index Provider – ESG ETFs and Best Index Provider...
Vinit Srivistava, MerQube
Index provider, MerQube, launched in 2019, with the aim of providing a “technology-driven answer to the most complex, rules-based investment...
Sean O' Hara
Pacer ETFs has announced the launch of three Cash Cows UCITS ETFs. The firm writes that this will give European...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by