Source has launched accumulation shares for two fixed income ETFs. They provide access to the PIMCO Euro Short Maturity Source UCITS ETF (PJSR GY), and the EUR922 million PIMCO Short-Term High Yield Corporate Bond Index Source UCITS ETF (STYC LN).
Peter Thompson, President at Source, says: “These new listings are both in response to demand from investors who are attracted to the funds but do not want the income to be distributed. The most efficient way to do this is rolling the bond payments back into the funds automatically. That way, the income is put back into invested assets rather than paying out in cash.”
PJSR is the largest actively managed ETF in Europe and benefits from the wealth of PIMCO’s resources and expertise in this area of the market. The fund invests in primarily EUR-denominated investment grade corporate and government debt with short maturities, and aims to maximise income while preserving capital and ensuring daily liquidity. With interest rates likely to remain low in Europe for the foreseeable future, the fund may be attractive for investors who are looking for an alternative to cash deposits.
One of the main attractions of STYC is also related to interest rates, but in this case to US rates. The fund invests in US high yield securities with maturities of up to five years, less than that of the broader high yield market. Market expectations suggest that the US Fed could begin raising rates in the second half of 2015, and investors may be considering this fund for reducing their portfolio’s interest rate risk in this environment.