ETF creates and redeems shares via in-kind exchanges<\/a> while the mutual fund creates and redeems in cash. This forces the mutual fund to incur additional expenses and potentially impacts tax efficiency.<\/p>\nFifth, the ETF has a 0.55% expense ratio while the mutual fund expense ratio depends on share class (0.46% to 1.60%).<\/p>\n
Finally, transaction fees are broker dependent, but the broker omnibus accounts allow investors to bypass the minimum dollar amounts. If you open a mutual fund account directly with the mutual fund company, then there are typically no transaction fees. Apparently Bill Gross forgot to tell his mother these facts when she complained that brokerage-firm minimums stopped her from buying his mutual fund. I usually recommend PIMCO Total Return Class D (PTTDX) for clients using brokerage accounts.<\/p>\n
Top holdings of TRXT include FNMA TBA 4.0% Apr 2042 11.8%, FNMA TBA 3.0% Mar 2027 10.9%, FNMA TBA 4.5% Apr 2042 10.3%, US Treasury Note 0.875% Dec 2016 10.1%, and US Treasury Note 0.25% Feb 2015 10.0%.<\/p>\n
Yield, duration, and other portfolio data points are not available. If you believe it will be a clone of the mutual fund, then expect a 30-day SEC yield of 2.7% and a duration of 6.3 years.<\/p>\n
To learn more about TRXT, please refer to the TRXT snapshot, fact sheet (pdf), and prospectus (pdf). There will be no shortage of information and analysis on TRXT in the future. It will probably be the most analyzed ETF for the next year or more.<\/p>\n
Bottom Line:<\/strong> <\/em>TRXT will likely have performance results similar to the mutual fund version. Tax efficiency, brokerage costs, expense ratios, and portfolio holdings will all play a roll in the performance differences. The best choice for you will be dependent on your particular situation. If you are a current investor in the mutual fund, there is no need to take immediate action. You will have plenty of time (months or maybe even years) to evaluate the ETF version and to determine how your \u201cnet results\u201d may be affected by moving from the mutual fund to the ETF version.<\/p>\nDisclosure covering writer, editor, and publisher: Long PTTDX. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"Note: the ticker for this ETF changed from TRXT to BOND effective April 4, 2012. The PIMCO Total Return Exchange-Traded Fund (TRXT) began trading March 1, 2012. Prior to its launch, TRXT became the most highly anticipated ETF introduction since the MacroShares Major Metro Housing Up\/Down pair (UMM and DMM) burst onto the scene. The …<\/p>\n","protected":false},"author":4,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"acf":[],"_links":{"self":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/1518"}],"collection":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/comments?post=1518"}],"version-history":[{"count":0,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/1518\/revisions"}],"wp:attachment":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/media?parent=1518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}