Pimco Enhanced Short Maturity Active ETF’s veteran liquidity-focused ultrashort managers use the firm's full toolkit to execute this time-tested process, making it a top option among its peers. This exchange-traded fund's mandate is more constrained than that of its sibling Pimco Short-Term PTSHX.

Jerome Schneider leads this deep, dedicated team of ultrashort specialists. He has continued to develop the team since he assumed leadership of Pimco's short-term desk in 2010. While Schneider is the face of the firm’s short-term strategies, he relies on comanagers Andrew Wittkop and Nate Chiaverini, Pimco veterans who bring specialties in rates and derivatives, and corporate credit, respectively. This is a highly collaborative team, and the addition of these comanagers in July 2021 added depth and lessened key-person risk. They do not want for resources and draw on the firm’s extensive global investment team of analysts, traders, macroeconomic experts, and risk managers.

This time-tested process stands out. Focusing only on short-term and liquidity markets, strong collaboration, and consistent inputs support the strategy's liquidity and capital preservation objectives. The team has a large toolkit, and it doesn’t hesitate to use it, but the ETF avoids non-investment-grade paper, non-U.S. developed debt, and foreign currencies. After taking cues from Pimco's macroeconomic forecasts, the team works to construct a portfolio with securities that aim to maximize yield and total return potential. They draw on large corporate and structured products research teams to form its bottom-up decisions, as investment-grade credit and securitized debt are featured prominently and contribute to its yield advantage versus peers. Emerging-markets debt complements its core portfolio but is only used sparingly. The team uses the full range of its zero- and one-year duration band. In 2022, they expanded their ability to use U.S. Treasury futures to better manage interest-rate risk. While this adds complexity, this team has proved its ability to effectively manage these instruments.

The ETF's extra precautions versus Pimco Short-Term may cause it to lag during markets that reward competitors that take more credit and liquidity risk. Since Schneider's first full month in December 2011, the ETF's 1.4% annualized gain through July 2023 narrowly beat its unique ultrashort bond Morningstar Category peer median, placing it ahead of three fifths of rivals. Adjusted for volatility, results are only average; its Sharpe ratio, a measure of return relative to standard deviation, landed slightly ahead of its median rival. While their approach has resulted in higher volatility in stressed times than the category norm, its long-term volatility is near that of its median peer.

Analyst Rating

A first-rate ultrashort active ETF.

Senior Analyst

Paul Olmsted

Pimco's time-tested process stands out from its ultrashort peers. Laser focus on short-term and liquidity markets, strong collaboration, and consistent execution earn a High Process rating. 

Liquidity and capital preservation are paramount. The team has as large a toolkit as any ultrashort competitor and it doesn’t hesitate to use it. The process begins with cues from Pimco's macroeconomic forecasts to directionally guide the strategy's interest-rate, yield curve, currency, country, and sector decisions. With these inputs, the managers get to work on building a portfolio with securities that aim to maximize yield and total-return potential.

The team draws on large credit and structured products research teams to form its bottom-up decisions, with investment-grade credit and securitized debt making up the lion's share and contributing to its yield advantage versus peers. While these stakes are routine both here and in competitors' portfolios, this strategy also branches into less conventional areas such as emerging-markets debt but avoids non-investment-grade paper, non-U.S. developed debt, and foreign currencies.

The team uses the full range of its zero- to one-year duration band (a measure of interest rate sensitivity), depending on their outlook, and avoiding structured bonds with volatile cash flows limits unexpected duration extension. Modest derivative usage adds complexity and in late 2022, the ETF added the ability to use U.S. Treasury futures for more effective interest-rate management. This additional lever makes sense; Pimco has proved its ability to effectively manage these instruments and identify mispriced securities among cash and derivatives markets.

High

Process

Jerome Schneider leads this deep, dedicated team of ultrashort specialists that draws on Pimco’s extensive global fixed-income resources to earn a High People rating. 

All this team does is ultrashort and liquidity strategies, and it shows. It's been nearly a decade since Jerome Schneider won Morningstar’s Fixed Income Manager of the Year award, but he doesn’t rest on his laurels. After joining Pimco in 2008, he rose to take over leadership of the short-term desk in 2010, but this is not a one-person show. He works hand in hand with comanagers Andrew Wittkop and Nate Chiaverini, Pimco veterans whose specialties in rates and derivatives, and corporate credit, respectively, add depth and lessen key person risk; they joined as comanagers in July 2021. 

The team does not want for resources, human or otherwise; they added a junior manager in 2023 to the team of 13 short-term specialist managers. This core short-term debt team is stable with few key departures over Schneider's watch; there have been no notable departures since a senior member of the liquidity team left in 2018. The comanagers draw on Pimco's extensive global investment team of analysts, traders, macroeconomic experts, and risk managers. In addition to running dedicated short-duration mutual funds and exchange-traded funds, the team manages over $300 billion across a range of short-term assets for institutional accounts and other Pimco strategies. 

The managers also share in the strategy's performance. Schneider and Wittkop each own between $500,000 and $1 million across Pimco's ultrashort suite of funds, while Chiaverini has at least $10,000.

People

Some concerns notwithstanding, Pimco's massive resources--both capital and human--and its laser ‎focus on excellence merit an Above Average Parent rating.‎
True, Pimco could be better on pricing. Shareholders, particularly in Europe, haven't enjoyed the ‎economies of scale that they could given Pimco's massive asset base. The firm, however, believes its ‎pricing is fair based on what it consistently delivers for investors, and it's hard to argue that's not the ‎case.‎
Pimco has generally enjoyed great success with its intense working culture, even if departures are a ‎byproduct of that intensity and can sometimes dim the near-term outlook on strategies. Yet, more ‎often than not, Pimco draws on its legion of skilled people and positions the next generation to ‎thrive.
CIO Dan Ivascyn and CEO Manny Roman ‎represent that next generation and have built on the organizational strengths they inherited. An experienced and critical-thinking investor, ‎Ivascyn has sought to curate an elite staff and capable investment culture since he assumed his ‎current role in 2014 and since Roman joined him in 2016. They have significantly grown the firm's pool ‎of investment professionals and supported them by spending massively on technology and ‎technologists to spur persistent outperformance while keeping risk in check. There may be a few others in Pimco's league, but very few.‎

Above Average

Parent

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