The snappily titled Pimco Covered Bond Source Ucits ETF is managed by Kristion Mierau, senior vice president and head of Pimco’s European covered bond portfolio management team. It is billed as the first active ETF in this asset class to be available to investors.
While covered bonds have traditionally been unique to Europe, they are increasingly being issued outside the region. At current spread levels, the providers believe covered bonds also offer investors a more attractive and secure way to gain credit exposure than unsecured senior bank debt.
“This expanding investment universe creates new opportunities for investors and fulfils their increasing demand for ‘safe assets’,” said Mierau.
“In the current low interest rate environment, covered bonds offer attractive risk-adjusted yields and are potentially a compelling alternative to broad European government bonds, as the asset class has historically provided higher returns with lower volatility and lower sensitivity to changes in market yield levels.”
The ETF is traded on Deutsche Börse and has a first year annual management fee of 0.38%.