Pacific Investment Management Co. has proposed that the PIMCO Mortgage-Backed Securities Fund, a mutual fund, be converted into a newly created ETF, a filing with the Securities and Exchange Commission shows.
If the reorganization is approved and completed, it would mark the first time PIMCO has converted a mutual fund into an ETF, a PIMCO spokesperson said. The PIMCO Mortgage-Backed Securities Fund had $141 million in total net assets as of Jan. 31, PIMCO's website shows.
"We have a variety of mutual funds that offer mortgage exposure, but our ETF suite does not include a mortgage-focused strategy," the spokesperson said. "While some fixed income categories are still in their nascent state of adapting ETFs, the mortgage category is relatively more developed and has seen strong category flows."
At a PIMCO Funds' board of trustees meeting held in February, PIMCO proposed that the board at a future meeting consider approving a reorganization, according to the March 1 SEC filing. If approved, the conversion is currently expected to be completed on or before Sept. 20, the filing said.
PIMCO has increasingly been building out its ETF lineup, said Todd Rosenbluth, head of research at TMX VettaFi, a data and analytics provider.
"Two of their funds — MINT and BOND — were among the first such actively managed fixed income ETFs," Rosenbluth said, referring to the $10.8 billion PIMCO Enhanced Short Maturity Active Exchange-Traded Fund and the $4.1 billion PIMCO Active Bond Exchange-Traded Fund by their respective ticker symbols. "A potential mutual fund conversion would further drive their ETF growth and would be a positive sign."
PIMCO had $31 billion in total ETF assets under management as of Jan. 31, the spokesperson said. PIMCO managed a total of $1.86 trillion in assets as of Dec. 31.
