PIMCO has listed a new actively managed UCITS ETF focused on global government bonds on the London Stock Exchange.
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By ETFWorld.co.uk
Ryan Blute, Managing Director and Head of Global Wealth Management, EMEA at PIMCO
The PIMCO Advantage Global Government Bond UCITS ETF is available through three distinct share classes, providing options for GBP-hedged and USD-based investors with different income preferences.
The ETF’s objective is to maximize total return through a diversified portfolio of sovereign fixed income instruments denominated in major global currencies. It is benchmarked against the Bloomberg Global Agg Treasury Index, a broad measure of global government bond markets. The fund is actively managed and seeks returns in excess of this index over the medium to long term.
Investment Strategy and Risk Parameters
The fund’s management will maintain the average portfolio duration within two years (plus or minus) of its benchmark index. It will invest primarily in investment-grade sovereign debt but may allocate up to 10% of assets to securities rated as low as BB-/Ba3. The fund can invest without limit in emerging market sovereign securities.
A notable feature is its controlled currency exposure. While investing in non-USD bonds, the fund limits its overall non-USD currency exposure to 20% of total assets. It will use currency forwards, futures, options, and swaps for hedging activities. The manager states that while the fund is active, its deviation from the index is expected to be limited, anticipating low volatility in the return difference between the fund and its benchmark.
Share Class Details and Target Audience
The three share classes represent the same underlying portfolio but cater to different investor needs:
- GOVZ (IE000KXNPEV8): GBP-hedged, accumulation share class. TER is 0.24%. Suitable for UK-based investors seeking to mitigate currency risk against Sterling and reinvest income.
- GOVS (IE000J46YVX2): GBP-hedged, income share class. TER is 0.24%. Suitable for UK-based investors seeking a GBP-hedged income stream.
- GOVI (IE000Y2B34V0): USD, accumulation share class. TER is 0.19%. Aimed at investors with a USD base who do not require currency hedging.
Ryan Blute, Managing Director and Head of Global Wealth Management, EMEA at PIMCO, commented on the launch: “The expansion of our UCITS ETF range represents a key milestone in our commitment to providing investors with actively managed solutions. By combining PIMCO’s more than 50 years of rigorous active fixed income management, our track record in global fixed income and core bond solutions, and our expertise with the efficiency of the ETF structure, we provide clients with the fundamentals to navigate today’s complex markets and achieve their long-term investment goals.”
Context and Considerations
The launch provides European investors with a actively managed, risk-controlled vehicle to access PIMCO’s core fixed income capabilities within the UCITS framework. The strategy’s focus on relative value within the global government bond complex, combined with its strict duration and currency guidelines, positions it as a potential core holding.
Prospective investors should base their analysis solely on the official fund documentation for the PIMCO UCITS ETF and disregard the unrelated U.S. products that share its tickers. The fund’s ability to invest in emerging markets and lower-rated bonds, within defined limits, adds a measured credit risk dimension to the primary sovereign interest rate exposure.
Source: ETFWorld.co.uk
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