Pimco and Source launch hedged version of high yield ETF

Wheat fieldPimco has partnered with exchange-traded fund (ETF) provider Source to launch a version of its successful high yield corporate bond ETF with a sterling-hedged share class. The ETF will be listed in London and the hedged share class aims to remove US dollar currency exposure for sterling investors who access the US high yield bond market. Called the Pimco Short-Term High Yield Corporate Bond Index Source Ucits ETF, it aims to generate a comparable yield to the broad US high yield index. An existing product without a sterling hedge has raised $1.2 billion (€1.1 billion). The product is a "smart passive" solution and uses a risk factor-based approach to optimise the replication of the Bank of America Merrill Lynch US High Yield 0-5 Year index. James Polisson, chief marketing officer of Source, says the share class meets the needs of investors in the UK who are interested in accessing the underlying US high-yield bond market, but who prefer to not have any currency exposure outside of sterling. "Secondly, it meets the needs of income-seeking investors wanting not only higher yields but also more frequent distributions." Income distribution is monthly. Mike Trovato, head of product management at Pimco Europe, says the ETF offers yield enhancement and also, by investing in bonds with shorter maturities, it offers protection should the Federal Reserve hike rates before the end of the year. ©2015 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.