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Are Bonds Different? Active Fixed Income ETFs

Active vs. passive in fixed income ETFs? How bonds are different and why active management deserves a closer look.

 

Tuesday, September 24, 2019 at 11 am EDT | 4:00 pm GMT

Investors, recognizing the benefits of the ETF vehicle for fixed income, continue to pour record amounts into bond ETFs while the active vs. passive debate is heating back up. There are many reasons why actively managed bonds can potentially outperform passive – yet the flows are overwhelmingly going to passive fixed income ETFs. Are these allocations to passive intentional or inadvertent? Do investors realize how bonds are different than equities when it comes to indexing?

Todd Rosenbluth, CFRA Head of ETF & Mutual Fund Research and David Braun, Managing Director and Portfolio Manager for PIMCO, will explore the relative merits of active and passive approaches to fixed income and answer some key questions:

  • How have active managers fared versus passive in fixed income?
  • What makes bonds different than stocks when building a portfolio with ETFs?
  • How are actively managed bond ETFs positioned to help prepare portfolios for uncertain markets ahead?

 

Presented by:

  • Todd Rosenbluth, Head of ETF and Mutual Fund Research, CFRA
  • David Braun, Managing Director and Portfolio Manager, PIMCO

 

David Braun, CFA, FSA, FRM

Managing Director and Portfolio Manager, PIMCO

Mr. Braun is a managing director and generalist portfolio manager in the New York office. Mr. Braun joined PIMCO in 2009 and is head of the U.S. financial institutions group (FIG) and stable value portfolio management teams. He is also a senior member of both the liability-driven investment and the U.S. core portfolio management teams. He oversees management of fixed income investment portfolios for institutional and retail clients. Mr. Braun has 25 years of investment, risk management (including chief risk officer of a large investment company) and actuarial experience. He holds an undergraduate degree in mathematics from the University of Connecticut. He is also a Fellow of the Society of Actuaries and a certified Financial Risk Manager.

 

 

Todd Rosenbluth, Head of ETF and Mutual Fund Research, CFRA

Todd Rosenbluth is Senior Director of ETF and Mutual Fund Research at CFRA where he leads the firm’s holdings-based research efforts. Todd publishes regular thought leadership content on equity and fixed income products, supports the quantitative fund models and interacts with clients. He also serves as a member of CFRA’s Investment Policy Committee. Todd has frequently provided ETF education at Inside ETFs conferences and been quoted in media outlets, such as Barron’s, New York Times and the Wall Street Journal. Todd also held the position of Senior Director of ETF and Mutual Fund Research for S&P Global Market Intelligence.

Prior to joining CFRA, Todd previously served in other financial positions at S&P Global, such as International Mutual Fund Sector Specialist, Large Cap Value and Large Cap Growth Analyst and has served on the Fund Services Asset Allocation Committee. Prior to joining S&P Global in 2001, Todd was managing editor of Value Line Mutual Fund Survey and Senior Large Cap and Small Cap Value Mutual Fund Analyst. He was also a Financial Advisor with Morgan Stanley.

Todd holds a B.G.S in Finance from the University of Michigan and an MBA in Finance from New York University.

 


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Past performance is not a guarantee or reliable indicator of future results.

A word about risk: Investing in the bond market is subject to certain risks including the risk that fixed income securities will decline in value because of changes in interest rates; the risk that fund shares could trade at prices other than the net asset value; and the risk that the manager's investment decisions might not produce the desired results. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested.  Diversification does not ensure against loss.

Exchange Traded Funds (“ETF”) are afforded certain exemptions from the Investment Company Act. The exemptions allow, among other things, for individual shares to trade on the secondary market. Individual shares cannot be directly purchased from or redeemed by the ETF. Purchases and redemptions directly with ETFs are only accomplished through creation unit aggregations or “baskets” of shares. Shares of an ETF are bought and sold at market price (not NAV). Brokerage commissions will reduce returns. Investment policies, management fees and other information can be found in the individual ETF’s prospectus.

This material contains the current opinions of PIMCO as the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2019, PIMCO

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