PIMCO Multisector Bond Active ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy merits an Average Process Pillar rating.  The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Pimco Senior Loan Active Exchange-Traded Fund

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. PIMCO Multisector Bond Active ETF earns an Average Process Pillar rating.    The leading factor in the rating is its parent firm's excellent long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. The firm's five-year retention rate of 82% also buttresses the rating. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 49%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

 Compared with other funds in the Multisector Bond Morningstar Category, this fund takes on significantly lower credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been underweight A rated bonds in recent years. In the latest month, the strategy has also relatively underweighted A rated bonds compared with Morningstar Category peers. Additionally, the managers have exhibited a notable sector bias away from cash over the past few years. Similarly, in recent months, the strategy also had less exposure to cash than peers. Finally, during the past few years, the fund leaned meaningfully towards debt with 10- to 15-year maturities. In this month, the strategy also leaned more towards debt with 10- to 15-year maturities compared with its peers.

  The portfolio holds assets with a higher average surveyed credit quality of BBB, compared with the category average of BB, and 14% of the strategy's assets are rated non-investment-grade compared with its average peers' 31%. Lower-credit-risk strategies are often able to navigate bear markets more effectively.

Average

Process

PIMCO Multisector Bond Active ETF earns an Above Average People Pillar rating. Daniel J. Ivascyn, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.1 stars, demonstrating excellent risk-adjusted performance versus category peers. The team is composed of a solid supporting cast of five additional named managers, averaging 14 years of listed portfolio management experience.  The management team is invested in the fund, but the maximum investment by any manager is between $100,000 and $500,000. An investment of more than $1 million would be ideal to align managers' interests with those of the fund's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

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.‎

Parent

PIMCO Multi Sector Bond Active ETF

PYLD actively manages a multi-sector portfolio of fixed income instruments issued by various US and non-US public or private-sector entities. The fund has no maturity and credit rating limitations.

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The timing of the Fed's potential next move was a hot topic during the VettaFi Fixed Income Symposium last week. Close to 600 live attendees, and many more via replay, heard from some of the smartest people in the fixed income ecosystem.

How Many Rate Cuts in 2024?

The Fixed Income Symposium is this week and it couldn't come at a more critical time. “With the latest inflation data, many advisors are wondering if the Fed will actually cut rates in 2024,” said VettaFi head of research Todd Rosenbluth.

Get a Handle on Rates at the Fixed Income Symposium

Advisors have long turned to active management to gain fixed income exposure. Thus far in 2024, this has persisted due in part to macroeconomic uncertainty.

Active Managers to Help Assess Fed Next Move

PIMCO Multisector Bond Active Exchange-Traded Fund ETF offers diverse exposure to yield-oriented fixed income sectors with active management from PIMCO. The PYLD ETF's strategy focuses on long-term investments and downside mitigation, with holdings in various fixed income instruments. PYLD sets itself apart from peers by offering exposure to both investment-grade and high-yield bonds, potentially generating higher yields and capital appreciation.

PYLD: A Go Anywhere Active Bond Management

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research Todd Rosenbluth discussed the PIMCO Multisector Bond Active ETF (PYLD) with Chuck Jaffe of “Money Life.” The pair talked about several topics regarding the fund to give investors a deeper understanding of the ETF overall.

VIDEO: ETF of the Week: PIMCO Multisector Bond Active ETF (PYLD)

VettaFi's Head of Research Todd Rosenbluth discussed the PIMCO Multisector Bond Active ETF (PYLD) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis, visit VettaFi | ETF Trends.

ETF of the Week: PIMCO Multisector Bond Active ETF (PYLD)

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PIMCO launched PYLD, a bond ETF, a few months back. The fund offers investors diversified exposure to bonds, and the expertise and performance that PIMCO is famous for. An overview of the fund follows.

PYLD: New Diversified Bond ETF From PIMCO

PIMCO Multisector Bond Active ETF is a new fixed-income ETF that aims to take advantage of higher rates via its recent June 2023 IPO. The fund has a large allocation to collateralized mortgage obligations (CMOs), which make up over 22% of its collateral pool. With mortgage rates at 20-year highs, CMOs represent an attractive risk/reward proposition at this point in the economic cycle.

PYLD: Attractive New Bond Fund From PIMCO

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PIMCO CEF Update: SEC Goes After PIMCO For Paired Swaps

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PIMCO has expanded its lineup of exchange traded funds with the launch of two active fixed income ETFs. The funds aim to harvest attractive yields by seeking historic opportunities in credit markets and short-term U.S. government securities, respectively.

News for PIMCO Multi Sector Bond Active ETF ETF (PYLD)