Pimco teams up with Source to launch covered bond ETF
Pimco has partnered with exchange traded fund provider Source to launch the Pimco Covered Bond Source Ucits ETF, the first actively managed covered bond ETF.
The fund is the first actively managed covered bond ETF available to investors and will be managed by Pimco head of European covered bond portfolio management Kristion Mierau.
Trading in euros, the ETF will be listed on Deutsche Börse Exchange and will have a managed fee of 0.38%.
Under Basel III, covered bonds can be used as lower risk-weighted assets and are also considered liquid assets under the new Basel III liquidity regulation.
Mierau commented: “This expanding investment universe creates new opportunities for investors and fulfils their increasing demand for ‘safe assets’.
“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.”