Nine Basis Points With This ETF!
Pimco’s launch should be a big wake-up call to ETF investors.
Has anyone noticed that Pimco, as of yesterday, is offering (now higher-yielding, lower-priced) short-term U.S. Treasuries at an expense ratio of 9 bps (0.09%)? Hougan notes that the new fund (NYSE Arca: TUZ) traded 300,000 shares on its first day, and I expect it’ll be trading a lot more than that. Pimco’s got BRAND in fixed income, and the forthcoming launch of six more ETFs (along with all sorts of other plans) indicates that it is just dipping its toes in the ETF market so far … and is planning to jump into the pool in a big way (liquidity, transparency).
That, to me, is very, very cool.
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We’ve got the cheapest bond ETF in the world right now coming out of Pimco, and it’s an index fund of the most liquid and desirable safe haven in the world: U.S. Treasuries. Seeing as though the fund is coming from Pimco, my guess is that it will trade and track well. I will note that while the fund is priced at 9 bps now, there is a 13 bps waiver up to 22 bps. I have no idea if the intention is to keep TUZ at 9 bps forever, or if Pimco will let it expire after the two-year fee waiver sunsets.
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